[Senate Hearing 114-297]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 114-297
 
             THE AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA)

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON AFRICA AND
                          GLOBAL HEALTH POLICY

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 23, 2015

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

                BOB CORKER, TENNESSEE, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 BARBARA BOXER, California
RON JOHNSON, Wisconsin               ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona                  JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia                TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky                  TIM KAINE, Virginia
JOHN BARRASSO, Wyoming               EDWARD J. MARKEY, Massachusetts

               Lester Munson III, Staff Director        
           Jodi B. Herman, Democratic Staff Director        
              Jamil Jaffer, Majority Chief Counsel        
            Margaret Taylor, Minority Chief Counsel        
                    John Dutton, Chief Clerk        

                         ------------          

                   SUBCOMMITTEE ON AFRICA AND        
                      GLOBAL HEALTH POLICY        

                 JEFF FLAKE, Arizona, Chairman        

JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
RAND PAUL, Kentucky                  CHRISTOPHER A. COONS, Delaware
JOHN BARRASSO, Wyoming               TOM UDALL, New Mexico
MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland

                              (ii)        

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hon. Jeff Flake, U.S. Senator From Arizona.......................     1
Hon. Edward J. Markey, U.S. Senator From Massachusetts...........     2
Tom Hart, U.S. Executive Director, One Campaign, Washington, DC..     3
    Prepared statement...........................................     5
Scott Eisner, Vice President for African Affairs and 
  International Operations, U.S. Chamber of Commerce, Washington, 
  DC.............................................................     9
    Prepared statement...........................................    11
William McRaith, Chief Supply Chain Officer, Pvh Corp., New York, 
  NY.............................................................    16
    Prepared statement...........................................    18
Walker Williams, President and Chief Executive Officer, 
  Leadership Africa USA, Washington, DC..........................    22
    Prepared statement...........................................    23
Catherine Feingold, Director of International Affairs, AFL-CIO, 
  Washington, DC.................................................    33
    Prepared statement...........................................    34
Additional Material Submitted for the Record.....................    48

                                 (iii)

  


                        THE AFRICAN GROWTH AND 
                         OPPORTUNITY ACT (AGOA)

                              ----------                              


                        THURSDAY, APRIL 23, 2015

                               U.S. Senate,
   Subcommittee on Africa and Global Health Policy,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:00 a.m., in 
SD-419, Dirksen Senate Office Building, Hon. Jeff Flake, 
chairman of the subcommittee, presiding.
    Present: Senators Flake [presiding], Isakson, Markey, and 
Coons.

             OPENING STATEMENT OF HON. JEFF FLAKE, 
                   U.S. SENATOR FROM ARIZONA

    Senator Flake. This hearing of the Senate Foreign Relations 
Subcommittee on African Affairs and Global Health Policy will 
come to order. Earlier this year I chaired a hearing to explore 
growth and investment in Africa following the 2014 U.S. 
leaders--Africa Leaders summit. And today we are talking about 
examining one of the key tools to help advance those aims, the 
Africa Growth and Opportunity Act, or AGOA.
    AGOA was created to provide incentives for African 
countries to strengthen the business climate, grow economies, 
and attract investment. And in doing so, AGOA aims to help 
encourage stronger commercial ties with the United States and 
integrate Africa into the global economy. As we all know, sub-
Saharan Africa's consumer base of nearly 1 billion people is 
rapidly growing and has the potential to create increased 
demand for U.S. goods, services, and technologies.
    While ultimately African countries in the United States 
would benefit from bilateral trade agreements like those in 
place with other markets, the AGOA reauthorization is a step in 
the right direction. And by the way, we hear that the Finance 
Committee late last night did pass a reauthorization with a 
broader package, so that is good news. AGOA will help build 
capacity on the continent while sending a positive signal to 
investors who are currently deciding whether to invest in 
Africa or to look further afield.
    Today we will hear from witnesses who will discuss how best 
AGOA can advance growth and investment on the continent as well 
as address the limitations of the act in the long term. Now, 
each of our witnesses today brings a unique perspective to the 
issue at hand, and I have no doubt they will contribute to the 
debate. I thank all of you for your time, for showing up here 
and sharing your experience, and I look forward to the 
testimony here.
    With that, I will recognize the distinguished ranking 
member, Senator Markey, for any comments he might have.

          OPENING STATEMENT OF HON. EDWARD J. MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much, and 
thank all of those who have come here this morning. The African 
Growth and Opportunity Act has been an important component of 
the United States engagement in Africa for the last 15 years. 
The esteemed Ambassadors from a number of African numbers, 
including Cape Verde, Gabon, Zambia, Ghana, South Africa, Togo, 
Burundi, Sierra Leone, Cameroon, and Madagascar, join us today 
in a testament to the importance of AGOA.
    AGOA enjoys bipartisan support because of its ability to 
assist qualifying sub-Saharan African countries in gaining 
greater access to United States markets, support economic 
development, and advance good governance. The African economy 
is expected to have a GDP growth of 4.5 percent in 2015, 
outpacing even Asia in its growth.
    As the Senate works on reauthorizing AGOA, we need to 
consider how we can improve on its existing success. I look 
forward to hearing from our witnesses how we can increase the 
ability of AGOA partner countries to access its benefits, and 
how AGOA can support decent work and fair labor standards. Mr. 
Chairman, I would also like to supplement today's testimony by 
including for the record a letter of support for the AGOA 
extension from the Ethiopian Global Initiative.
    Senator Flake. Without objection.

[Editor's note.--The letter mentioned above can be found in the 
``Additional Material Submitted for the Record'' section at the 
end of this hearing.]

    Senator Markey. Thank you, Mr. Chairman, and I yield back 
the balance of my time.
    Senator Flake. Thank you, Senator Markey. We will go ahead. 
I will introduce all of you together, and I believe Congressman 
Isakson is on his way. I will let him talk about the action 
last night when he gets here. But we will start with the 
witnesses.
    Tom Hart is the U.S. executive director for ONE, an 
advocacy organization that aims to end extreme poverty and 
preventable disease particularly in Africa. He and his team 
have provided expertise on development assistance, particularly 
in the areas of HIV/AIDS, malaria, and TB through PEPFAR, and 
the Global Fund, and the Millennium Challenge Corporation.
    Scott Eisner is the vice president for African Affairs at 
the U.S. Chamber of Commerce where he represents the Chamber's 
interest in sub-Saharan Africa through its Africa Business 
initiative. Before joining the Chamber, Eisner spent time in 
international politics working for the International Republican 
Institute in Malawi, and he trained political parties there in 
communications and campaign tactics.
    Walter Williams is the president and chief executive 
officer with Leadership Africa USA. Mr. Williams previously 
served as president and founder of Education Africa USA, 
focused on addressing educational challenges facing South 
Africa's first democratically elected government. As a 
consultant, Mr. Williams has worked with more than 100 NGOs 
actively involved in development issues. He has also worked 
extensively in international and U.S. government agencies.
    Bill McRaith is chief supply chain officer for PVH Corp., 
at which he oversees the company's global supply chain 
operations and is responsible for developing global production 
systems to service the needs of PVH retail and wholesale 
divisions. Before joining PVH, Bill served as senior vice 
president of global sourcing at Walmart, and was previously 
senior vice president of product development and supply chain 
operations with Spiegel brands.
    Catherine Feingold is the director of international affairs 
at the AFL-CIO. Ms. Feingold previously served as director of 
the Solidarity Center in Haiti and the Dominican Republic. 
Feingold is a member of the Council on Foreign Relations, and 
most recently worked in Haiti to promote good jobs and fair 
wages as part of the post-earthquake redevelopment effort.
    Again, thank you all for coming, and we will go ahead and 
start as I introduced you. And please go ahead, Mr. Hart. Let 
me just say your testimony will all be in the record, of 
course. If you could, as close to 5 minutes as possible, limit 
your remarks, we would be grateful.

 STATEMENT OF TOM HART, U.S. EXECUTIVE DIRECTOR, ONE CAMPAIGN, 
                         WASHINGTON, DC

    Mr. Hart. Great, thank you so much. Chairman Flake, Ranking 
Member Markey, and other members of the subcommittee, thank you 
for the opportunity to testify on the important role trade 
plays in alleviating poverty and on the reauthorization of 
AGOA. The ONE Campaign represents a broad constituency of 6 
million people globally, with a third in Africa and a third in 
the United States.
    We are probably best known by our cofounder, Bono, the lead 
singer from U2. Bono actually has firsthand understanding of 
the benefits and importance of AGOA. His wife, Ali Hewson, 
founded a small clothing company called EDUN, which works with 
companies in Kenya, Madagascar, and Uganda importing products 
to the United States under AGOA. ONE fully supports the swift 
reauthorization of AGOA and hopes it might be strengthened in 
several ways that I will describe briefly.
    Trade is an essential tool in driving economic growth and 
creating jobs, which in turn reduces poverty. For example, the 
small village of Masoro in Rwanda saw a boost in jobs and 
income when the popular U.S. designer, Kate Spade, began 
working there. A 158 local artisans honed their skills to 
create quality products that are exported to global markets 
through Kate Spade. Most employees are the sole family 
breadwinner, with each supporting on average four other people. 
And additional jobs have been created as new restaurants and 
shops opened in the village to support the workers. This 
demonstrates the powerful impact that one access point to the 
global market can have on an entire community.
    For the sake of time, I will skip what AGOA has achieved 
over the last 15 years and discuss how we would like to see it 
improved. When Congress created AGOA, the United States 
eliminated tariffs and threw open the doors to U.S. markets 
only to find over time that very few products trickled through. 
Lack of trade and technical capacity, weak regional trade 
linkages, and insufficient critical infrastructure also stood 
in the way. Let me address each briefly.
    African countries need technical support to strengthen 
their economic policies, build well-functioning institutions, 
improve regulatory policies, and improve private sector 
operating practices in their own countries. And they need 
support navigating the 21 U.S. Government agencies that spend 
over $700 million trade capacity in 20 different categories. 
While all of these agencies are doing good work, we need 
greater coordination and streamlining among them. And we also 
must listen to what African businesses, local leaders, and 
government officials are asking for.
    Looking quickly at regional integration, Africa's most 
important trading partners live right next door, yet trade 
barriers between African countries are among the highest in the 
world. The Obama administration's Trade Africa initiative is 
making a good start by aiming to double intraregional trade in 
East Asia, which we support and believe should be expanded.
    We also believe the Millennium Challenge Corporation should 
have the authority to pursue regional compacts. MCC has already 
provided over $3 billion trade-related assistance to 14 AGOA-
eligible countries since its creation. With regionally focused 
compacts, MCC could promote cross-border engagement, create 
larger and more harmonized markets, and improve trade among 
countries in Africa.
    Lastly, most African countries struggle with insufficient 
infrastructure. Without adequate roads and ports, they cannot 
get their goods to market. Transportation costs can add 77 
percent to the value of exports making African products 
uncompetitive.
    Also nearly half of all African businesses cite the lack of 
reliable energy access as their biggest obstacle to growth. 
When electricity provided from the grid is not reliable, 
businesses must run diesel generators, which are three to six 
times more expensive as well as dirty and dangerous. Higher 
energy prices increase production costs, making manufacturing 
uncompetitive, slowing job growth, and slowing annual GDP 
growth by an estimated 1 to 3 percent. We hope the Senate will 
move swiftly to introduce and pass the Electrify Africa Act, 
which along with AGOA would be a one-two punch to support 
economic growth and poverty reduction in Africa.
    So what is next for the U.S. Africa trade relationship? We 
believe now is the time to look beyond preferences and 
nonbinding TIFAs and begin pursuing reciprocal trade agreements 
in order to deepen our economic relationship with the 
continent. As the Senator said, sub-Saharan Africa's GDP is 
expected to grow by four and a half times, outpacing even Asia. 
This growth means that there are going to be more customers in 
Africa, and we should make sure that we pursue agreements that 
allow these new customers to buy American goods.
    And to be clear, if we do not, others will. The European 
Union and China are both actively pursuing reciprocal trade 
agreements with sub-Saharan Africa. During the same period 
United States exports to Africa grew by three times, China's 
grew by thirteen. We would like to see a strong expansion of 
bilateral and regional investment treaties and have USTR pursue 
negotiations on free trade agreements with at least two sub-
Saharan African partners before the end of the administration.
    To conclude, ONE continues to believe that U.S. foreign 
assistance remains critical. The United States supports heroic 
work to combat HIV/AIDS, malaria, hunger, and poverty around 
the world, and this assistance will remain necessary for some 
time. But that time will be shorter when trade, not aid, 
defines our relationship with Africa. Now is the time to 
redouble our efforts to support economic growth on the 
continent.
    Thank you.
    [The prepared statement of Mr. Hart follows:]

                  Prepared Statement of Thomas H. Hart

    Chairman Flake, Ranking Member Markey, and distinguished members of 
the subcommittee, thank you for the opportunity to testify today on the 
important role trade plays in alleviating poverty, specifically on the 
reauthorization of the African Growth and Opportunity Act (AGOA).
    The ONE Campaign represents a broad constituency of 6 million 
members, one-third of whom are in Africa and one-third in the United 
States, with the rest in Europe and elsewhere around the world. As a 
policy advocacy organization committed to the fight against global 
poverty and disease, we raise awareness about critical issues and work 
with policymakers on bipartisan solutions. Our members are committed to 
addressing the impacts of extreme poverty as well as the long-term 
solutions. We believe trade is an essential tool in that fight.
    You probably know ONE from our cofounder Bono, the lead singer of 
the band U2. Bono actually has a firsthand understanding of the 
importance of AGOA. His wife, Ali Hewson, founded a small clothing 
company, called EDUN, which produces clothes in Kenya and Madagascar, 
and works with the Conservation Cotton Initiative Uganda. This 
initiative provides training and enterprise support to farmers in 
northwest Uganda. EDUN and the cotton initiative are employing Africans 
and creating clothes that are imported to the United States under AGOA.
    ONE heartily supports the reauthorization of AGOA and applauds the 
Finance Committee for clearing the legislation. We hoped to see a 15-
year extension, but believe a 10-year extension provides the assurance 
businesses need to maintain operations, make new investments, and 
continue to effectively utilize the AGOA preference program. We also 
hope the legislation will be strengthened in several ways I will 
describe later. But most importantly, we urge Congress to reauthorize 
the program quickly.
    The ability to trade is essential to driving economic growth and 
creating jobs, which in turn reduces poverty. After the Korean war, 
South Korea was one of the poorest countries in the world with a per 
capita income of only $64, making it at that time poorer than the 
Democratic Republic of Congo. Today, South Korea has a per capita 
income of over $23,000, with its own foreign aid program, and is richer 
than either Spain or New Zealand. South Korea has achieved an average 
growth rate of 7 percent over the last 50 years, which has had a 
profound impact on alleviating poverty. Trade and export-oriented 
growth were two key elements of this incredible development and 
poverty-reduction success.
    We are seeing signs of this type of economic development and 
investment in countries across Africa as well. For example, Kate Spade, 
the popular U.S. apparel and accessory company has begun working with a 
Rwandan-owned for-profit business that employs 158 workers. Local 
artisans in the village of Masoro have honed their skills to create 
quality products that are exported to global markets. Seventy-seven 
percent of the employees are the primary or sole income earner in their 
home and 80 percent report this is their first formal job. Each 
employee is, on average, supporting four other people. This is not a 
charity project for Kate Spade; it is a strategic investment in this 
group of artisans that is helping them become a profitable supplier, 
able to participate in the global market place.
    The impact of this one supplier is not just limited to its 
employees and their dependents; it is having an impact on the broader 
community as well. Within the first 8 months of the business being an 
official Kate Spade & Company supplier, a new restaurant opened to 
serve the employees, and new salons and seamstresses opened as well. 
This small-scale example demonstrates the powerful impact one access 
point to the global market place can have for an entire community.
    My testimony today will focus on three areas. First, what AGOA has 
accomplished, particularly in regards to the fight against extreme 
poverty; second, what we see as some of AGOA's shortfalls and ways it 
can be improved; and third, what is next for the U.S.-Africa trade 
relationship.
                      what has agoa accomplished?
    Since AGOA's adoption in 2000, U.S. imports from sub-Saharan Africa 
have increased more than three times, and reached $26.7 billion in 
2014. The vast majority is from oil and minerals. Nonmineral and nonoil 
exports to the United States have increased fourfold in the last 14 
years, leading to strong job creation. Since 2001, AGOA has generated 
approximately 350,000 direct jobs and over 1 million indirect jobs 
across sub-Saharan Africa, supporting up to 10 million people. 
Increased trade under AGOA has also created around 100,000 jobs in the 
United States, because as African economies grow they open up new 
markets for U.S. goods and services.\1\
    The textile industry has experienced particularly strong growth 
under AGOA, and is responsible for a good number of the jobs created. 
Many of these jobs are held by women, which is important given that 
women are more likely to invest their income in the health and welfare 
of their families and communities. The State Department is working 
through its African Women's Entrepreneurship Program to target African 
women entrepreneurs to promote business growth, create better business 
environments, and increase trade both regionally and to U.S. markets 
through AGOA.
                       how can agoa be improved?
    One often-voiced criticism of AGOA is only a small number of 
countries use it. In 2013, over half of the AGOA eligible countries 
exported less than $1 million of product to the United States. South 
Africa and Nigeria alone represent 73 percent of all U.S. noncrude 
petroleum imports under AGOA in 2013. The top textile and apparel 
producers are Kenya, Lesotho, and Mauritius, followed by Cote d'Ivoire 
which exports primarily cocoa products.\2\
    When Congress created AGOA 15 years ago, many believed tariffs and 
the lack of market access were the biggest inhibiters of economic 
growth in Africa. However, when AGOA removed those barriers we saw 
there were other structural problems keeping many African countries 
from taking advantage of AGOA preferences, including weak trade and 
technical capacity, a lack of regional trade linkages, and insufficient 
critical infrastructure. In other words, Congress threw open the doors 
on tariffs and access, only to find very few products trickle through. 
These additional barriers must be addressed in order for more sub-
Saharan African countries to fully take advantage of the benefits 
provided under AGOA and grow their economies.
    The Agriculture sector is one that demonstrates the needs across 
all three of these issues. Sub-Saharan Africa is home to 50 percent of 
the world's uncultivated arable land and could be a major export area 
for the continent. Yet, it is only expected to produce 15 percent of 
its own projected food demand by 2030. Barriers to agricultural growth 
are similar to the barriers in other economic sectors on the continent: 
lack of regional integration and technical capacity. Before Africa can 
better utilize the trade preferences AGOA provides, there must be 
better intra-African value chains throughout the region. This means 
transportation infrastructure with shorter waiting times at border 
crossings and ports. It means harmonized regulations and standards 
throughout the region, to facilitate linkages in the value chain and 
cross-border collaboration between companies. And it means greater 
technical assistance from the U.S. Government on sanitary and phyto-
sanitary standards, so that African produce can be shipped globally.
Trade and Technical Capacity
    Trade capacity-building is essential for ensuring the utility of 
AGOA for eligible partners and addressing nontariff trade barriers. 
Trade capacity-building covers a variety of activities, including 
efforts to strengthen economic policies; remove trade barriers; build 
well-functioning economic, political, and legal institutions; improve 
regulatory policies that affect the way firms compete; and improve 
private sector operating practices and strategies.
    According to the USAID database on trade capacity-building there 
are 21 U.S. Government agencies that spent over $711 million in trade 
capacity-building assistance in 2013.\3\ This assistance is given in 20 
different categories. While all of these agencies are doing good and 
necessary work, we need greater coordination and streamlining among 
these agencies to ensure maximum efficiency and return on our 
investment.
    We must also recognize that our African partners know best what 
they need, and ensure that we are listening to what business owners, 
local leaders, and government officials in African countries are asking 
for. The U.S. Government must do a better job of properly targeting 
resources for capacity-building projects that are based on locally 
identified capacity gaps.
    Also, we recognize our partners in Africa often lack the technical 
assistance and knowledge to be able to navigate the complex web of 
agencies that participate in setting standards for trade.
Regional Integration
    As the United States main Africa trade promotion vehicle, AGOA 
should encourage and facilitate more intra-Africa trade. Trade 
barriers, including nontariff barriers, between African countries are 
among the highest in the world. USAID and USTR are working through the 
Obama administration's Trade Africa initiative to address the need for 
further regional integration and intra-African trade. In its initial 
phase, Trade Africa is focused on a partnership with the East African 
Community.\4\ It aims to double intraregional trade among EAC member 
states, increase exports from EAC member states to the United States by 
40 percent, and reduce the average time it takes to import or export a 
container from a land-locked country by 15 percent, and to decrease by 
30 percent the average time a truck takes to transit selected borders.
    From 2013-2014 there was a 24-percent increase in exports of goods 
from the EAC to the United States. Container transit times from Mombasa 
to Kigali have decreased from 21 days to just 6 days, and associated 
costs are down by over $1,700 per container.\5\ This is excellent 
progress and we need more targeted assistance like this, having a real 
impact on the cost of production that increases the competitiveness of 
goods from African countries.
    We also believe Millennium Challenge Corporation can be a key 
player in improving regional integration, and believe this legislation 
should give MCC the authority to pursue regional compacts. MCC has 
already provided over $3 billion in trade-related assistance to 14 AGOA 
eligible countries since its creation in 2004. With regionally focused 
compacts, MCC could significantly improve trade and investment between 
and among countries in Africa. By promoting cross-border engagement, 
MCC regional compacts would help create larger and more harmonized 
markets for trade and development and, at the same time, open new 
opportunities for American companies.
Infrastructure and Energy
    Lastly, sub-Saharan African countries are struggling with 
insufficient critical infrastructure. Without adequate roads and ports, 
they cannot get their goods to market. Transportation costs can equal 
up to 77 percent of the value of exports, making African products 
uncompetitive in the global market place. In addition, electricity 
costs are enormous because a scarcity of grids means that producers are 
forced to pay for expensive generators and diesel fuel to power their 
activities.
    Among the massive infrastructure deficit on the continent, we 
believe electricity is a critical challenge we should meet immediately. 
This is why ONE strongly supports the introduction and passage of the 
Electrify Africa Act as soon as possible. This legislation would 
support expanding access to catalyze investment in the energy sector in 
Africa, generating 20 new gigawatts of power, providing first-time 
access to 50 million people by 2020. The bill uses already existing 
government resources, allowing us to reach these goals with no 
additional appropriations needed.
    Nearly half of all African businesses cite the lack of reliable 
energy access as their biggest obstacle to growth. When electricity 
provided from the grid is not reliable, businesses must run diesel 
generators to keep their operations functioning. Pulling energy from a 
generator costs somewhere between three and six times what electricity 
from the grid costs worldwide.\6\ Higher energy prices increase 
production costs, making manufacturing in Africa uncompetitive, slowing 
job growth, and slowing annual GDP growth by an estimated 1 to 3 
percentage points.\7\ In Kenya 57 percent of businesses own generators; 
in Tanzania it is 42 percent; and in Ethiopia, 41 percent.\8\ In South 
Africa, growth fell from 2.2 percent in 2013 to 1.5 percent in 2014, 
due in part to electricity supply constraints.\9\
    Access to safe and reliable electricity at competitive costs is 
essential to economic development. In order for African businesses to 
be competitive in the global market place, we must address these very 
real and serious infrastructure challenges that are currently serving 
as nontariff barriers to trade, both within Africa and between Africa 
and the rest of the world.
    One year ago, I sat at this very table at a hearing on energy 
poverty, and bipartisan legislation very nearly passed in December. We 
hope the Senate will move expeditiously to pass the Electrify Africa 
Act, which, along with speedy passage of AGOA, would be a one-two punch 
to support economic growth and poverty reduction in Africa.
          what is next for the u.s.-africa trade relationship?
    While we strongly support AGOA, we believe there is much more the 
United States Government can and should be doing to enhance trade with 
sub-Saharan African countries. The statement of policy in the original 
AGOA legislation expressed support for negotiating reciprocal and 
mutually beneficial trade agreements. As Congress moves to reauthorize 
and improve AGOA, now is the time to look beyond preferences, and 
recognize the need for reciprocal trade agreements in this rapidly 
maturing relationship between the United States and the continent.
    In 2015, sub-Saharan Africa's GDP is expected to grow at 4.5 
percent, making it the fastest-growing economic zone in the world, 
outpacing Asia's regional average of 4.3 percent annual growth.\10\ 
This economic growth means there is a rising middle class in Africa, 
who are new consumers. The United States should be aggressively 
pursuing agreements that would allow these new consumers to buy 
American goods.
    The European Union and China are both actively pursuing reciprocal 
trade relationships with sub-Saharan Africa. During the same period 
that U.S. exports to Africa grew by a multiple of 3, China's grew by a 
multiple of 13, from $4.4 billion to $56.3 billion. In fact, in 2011, 
U.S. and Chinese exports of machinery and transport equipment to sub-
Saharan Africa represented 41 percent and 40 percent, respectively, of 
the value of the two countries' total exports to sub-Saharan Africa. 
But China's exports of machinery and transport equipment was almost 
triple the value of the United States. If the United States continues 
to be satisfied with the nonreciprocal AGOA as the primary feature of 
our trade relationship with Africa, we risk missing out on huge 
opportunities.
    We would like to see the administration pursue an aggressive trade 
agenda in Africa over the next 18 months that moves beyond nonbinding 
Trade and Investment Framework Agreements. We would like to see the 
United States pursue Bilateral Investment Treaties that provide foreign 
investors with core protections against political risk and uncertain 
business environments. Currently the United States has only six BIT 
agreements in place, which collectively only cover 7 percent of 
regional GDP.\11\ USTR should move to conclude the BIT's currently 
under consideration with Mauritius and the East African Community. 
Additionally and importantly, we also would like to see USTR begin 
pursuing negotiations on FTAs with at least two sub-Saharan African 
partners before the end of this administration.
    We were pleased to see that the introduced AGOA legislation 
includes a requirement that USTR submit a report to Congress 
identifying African countries that have expressed an interest in 
entering into a FTA and evaluating the viability of pursing a FTA, and 
plans for negotiating and concluding a FTA. This reporting requirement 
is a great start, but should be strengthened.
    USTR should be required to report to Congress within 6 months of 
passage, and provide updates annually thereafter. The report should 
include a list of no less than five countries USTR identifies as 
potential targets for FTA negotiations. USTR should also be required to 
provide a roadmap of reforms necessary for African countries to be able 
to enter into a negotiation for an FTA. I hope that Congress will push 
USTR on this worthy goal, and strengthen reporting language to ensure 
USTR is proactive in this regard.
                               conclusion
    ONE supports AGOA and the U.S.-Africa trade relationship because we 
believe trade is an important tool to reduce poverty, promote job 
creation and the dignity that all people strive for, no matter where 
they live. I urge you to reauthorize AGOA as quickly as possible and 
strive to strengthen it; introduce and pass the Electrify Africa Act; 
and push the administration to pursue more reciprocal trade agreements 
with our partners in sub-Saharan Africa.
    Of course, at ONE, we continue to believe our foreign assistance 
programs remain critical. The United States supports heroic work to 
combat HIV-AIDS, malaria, hunger, and poverty around the world, and 
this assistance will remain necessary for some time. But that time will 
be shorter when trade, not aid, defines our relationship with Africa. 
Now is the time for us to strengthen our resolve and redouble our 
efforts to boost economic growth in Africa.
    Thank you for your time.

----------------
Notes

    \1\ http://www.brookings.edu//media/research/files/reports/2012/6/
agoa/agoa_full_report.pdf.
    \2\ Kenya at $342 million, Lesotho at $321 million, and Mauritius 
at $199 million.
    \3\ African Development Foundation, Department of Agriculture, 
Department of Commerce, Department of Defense, Department of Health and 
Human Services, Department of Homeland Security, Department of Justice, 
Department of Labor, Department of State, Department of the Interior, 
Department of Treasury, Environmental Protection Agency, Export-Import 
Bank, Federal Trade Commission, Inter-American Foundation, Millennium 
Challenge Corporation, Overseas Private Investment Corporation, Peace 
Corps, Small Business Administration, Trade and Development Agency, 
USAID.
    \4\ Burundi, Kenya, Rwanda, Tanzania, and Uganda.
    \5\ https://ustr.gov/about-us/policy-offices/press-office/
speechestranscripts/2015/february/remarks-ambassador-michael-1.
    \6\ McKinsey & Company. ``Brighter Africa: The growth potential of 
the sub-Saharan Electricity Sector'' pg. 1.
    \7\ Ibid.
    \8\ World Bank Enterprise Survey, World Bank Group, 2013.
    \9\ World Economic Outlook, International Monetary Fund, April 
2015. Pg. 65.
    \10\ The Economist, ``Africa is the Horizon: 2015 African Business 
Outlook Survey'' March 2015.
    \11\ Cameroon (1989), the Democratic Republic of Congo (1989), 
Republic of Congo (1994), Mozambique (2005), Rwanda (2012), and Senegal 
(1990).

    Senator Flake. Thank you, Mr. Hart.
    Mr. Eisner.

 STATEMENT OF SCOTT EISNER, VICE PRESIDENT FOR AFRICAN AFFAIRS 
    AND INTERNATIONAL OPERATIONS, U.S. CHAMBER OF COMMERCE, 
                         WASHINGTON, DC

    Mr. Eisner. Mr. Chairman, Ranking Member Markey, members of 
the committee, Scott Eisner, vice president for African Affairs 
at the U.S. Chamber of Commerce. Thank you for the opportunity 
to testify today.
    I sit before you representing the American business 
community. This is a community that is as energized as I have 
ever seen it before, eager to partner with African businesses 
and governments alike to bring a new level of prosperity to our 
mutual citizens. We fully endorse the reauthorization of AGOA, 
one that includes all current and future beneficiaries, 
including South Africa. AGOA has not just created jobs in 
Africa, but it has also created jobs in the United States. For 
instance, jobs in the automotive industry have been supported 
back here in the United States thanks to Ford's investments in 
South Africa.
    Since AGOA began, we have seen trade between sub-Saharan 
Africa and the United States triple, and we have seen rates of 
growth for many of these countries reach new heights that we 
never thought possible. Clearly we would not be where we are in 
our trading relationship with the continent had it not been for 
AGOA. For example, according to a report by the African 
Diplomatic Corps, AGOA has created over 300,000 jobs in sub-
Saharan Africa and as many as 100,000 jobs in the United 
States. AGOA has indirectly created as many as 1.3 million jobs 
in sub-Saharan Africa as well. Exports from AGOA eligible 
countries to the United States were $25.6 billion, more than 
four times the amount in 2001 they were last year. And U.S. 
exports--or U.S. imports from sub-Saharan Africa, including--
excluding energy products, were $4.4 billion, representing 
nearly a threefold increase.
    As we approach the 15-year anniversary of AGOA, we look 
forward to a speedy reauthorization. However, I want to use my 
time before you today not to reflect on the successes of the 
past, but what the future has to hold and what will need to be 
done to build upon the success of AGOA.
    Trade facilitation is critical for Africa's 
competitiveness, and it will reduce the cost for international 
and domestic merchants. While we have seen a number of tariff 
lines decline since the inception of AGOA, there remains a 
challenge to intra-Africa trade in the form of nontariff 
barriers that show the movement of goods, services, and people 
across borders.
    The elimination of such NTBs will go a long way toward 
creating new opportunities for job creation across the 
multitude of sectors both in the United States and in Africa. 
It will also help with addressing many of the challenges that 
African traders face when trying to export goods to the United 
States under AGOA. Simply put, full implementation of the TFA 
is a win-win for Africa and the United States.
    As we look at increasing capacity-building, many countries 
fail to take advantage of the duty-free benefits of the 
Preference Program. Major focus on improving AGOA is 
stabilization rate, specifically within nonenergy exports to 
the United States. Despite a significant increase of these 
exports to the United States, less than a million dollars is 
attributed to over half of the 39 AGOA beneficiary countries in 
2014.
    In order to get these figures out, the United States will 
need to double down its efforts in trade capacity-building. 
Greater reviews will need to be put in place and streamlining 
as well for funds allocated toward trade capacity-building 
toward the continent. We feel strongly that AGOA eligible 
countries should have to come up with AGOA action plan as well 
that would clearly lay out how they intend to utilize the 
Preference Program and what sectors they plan on emphasizing. 
Such action plans would aid the U.S. private sector a great 
deal by helping us to focus on key growth opportunities 
identified by the countries.
    The Chamber applauds the U.S. Government for the work they 
are doing to address regional integration throughout the 
continent. Efforts to establish regional investment treaties 
with regional trading blocks, such as the East African 
community, help to strengthen the interests of U.S. firms who 
are looking to invest in the continent by expanding the total 
market size. Regional integration is also a key factor in 
bringing down the cost of cross-border trade that I referenced 
earlier in my testimony. Regional integration is key to helping 
Africa compete globally.
    As we move beyond AGOA, we can all agree that it is an 
important part of our economic policy with the continent, but 
it cannot be only viewed as the only trade platform for us to 
engage with the diverse economies cross the continent. There is 
far too much at stake if we, as a country, simply stay the 
course. We need to find more effective ways to increase the 
two-way trading relationship between the U.S. and African 
markets, whether they be bilateral, or regional, or FTAs along 
the way.
    The Chinese continue to eat our lunch in many sectors 
across the continent, Europeans are signing bilateral and 
regional trade agreements left and right with African partners, 
and beyond competition from outside Africa we are seeing an 
increase of policies across the continent in such areas as 
local content, property rights, and the erosion of intellectual 
property that are impacting the ability for U.S. companies to 
invest. There has to be a better way for all stakeholders to 
engage on policy matters across the continent, whether it is 
the review of AGOA eligibility that needs to be implemented by 
our government to include a more robust private sector input or 
through the annual report to Congress that has not been 
published ???2008.??? We need to find a way to encourage our 
partners in Africa to have a more robust conversation with the 
American business community.
    The day after AGOA has been reauthorized is the day that we 
need to reshape our trade agenda with the continent. I fear 
that if we do not, our competitors from abroad will have made 
it very difficult for us to compete effectively in the future.
    Mr. Chairman, on behalf of the U.S. Chamber, I would like 
to thank this committee for affording me the opportunity to 
testify. As this Congress works to strengthen public policies 
and support private enterprise, the U.S. Chamber stands ready 
to help you in any way.
    Thank you.
    [The prepared statement of Mr. Eisner follows:]

                   Prepared Statement of Scott Eisner

    On the occasion of this hearing of the Senate Committee on Foreign 
Relations on the African Growth and Opportunity Act, I am pleased to 
testify on behalf of the U.S. Chamber of Commerce and our members. The 
Chamber is the world's largest business federation, representing the 
interests of more than 3 million businesses of all sizes, sectors, and 
regions, as well as state and local chambers and industry associations, 
and is dedicated to promoting, protecting, and defending America's free 
enterprise system.
    Across Africa, U.S. companies of all sizes and sectors see vast, 
often untapped possibilities for trade. The African Growth and 
Opportunity Act (AGOA) was enacted in 2000 and remains the cornerstone 
of U.S. trade and investment policy toward sub-Saharan Africa. The AGOA 
era has witnessed a significant improvement in economic conditions 
across the continent. Annual real gross domestic product (GDP) growth 
in sub-Saharan Africa was a half percentage point lower than global GDP 
growth in the decade prior to AGOA. Since its 2000 passage, sub-Saharan 
Africa's growth averaged 6.3 percent, more than 2 percent higher than 
the 3.9 percent world average.\1\ AGOA is a small but real contributor 
to this positive trend. This growth is linked not just to U.S.-Africa 
trading relations but to engagement with the entire global economy.
    The decade following AGOA's enactment has seen the continent's 
trade with the United States almost quadruple since 2001 with AGOA 
imports totaling $25.6 billion in 2014.\2\ It has led to the creation 
of thousands of American and African jobs and has helped expand 
Africa's middle class to nearly 350 million consumers.\3\
    However, economic policies in many African nations have for too 
long served as a drag on intraregional trade and investment. The region 
remains home to many of the world's poorest countries with major 
economic challenges linked to inadequate infrastructure, access to 
skilled labor, and insufficient power generation. Furthermore, trade 
with the United States has consisted largely of oil, gas, and minerals.
    In this context, AGOA's expiration on September 30, 2015, provides 
the opportunity to review AGOA's integral role within U.S.-Africa 
relations and to readjust the legislation to Africa's changing economic 
and political environment. The Africa of today is not the same 
commercial partner it was in 2000, and these changes call for an 
evolution of U.S. trade policy with an emphasis on increased private 
sector investment and two-way trade.
    As stated by U.S. Trade Representative Michael Froman, ``If we are 
able to achieve sustainable development, it is our view that investment 
must be the driver.'' \4\ In reviewing AGOA, we must recalibrate our 
trading preferences to account for recent changes and maximize the full 
potential of this preference program for all countries involved.
                           agoa's performance
    As the cornerstone of U.S.-Africa trade policy, AGOA is central to 
U.S. strategic interests. The Act represents a shift from our 
traditional aid-based approach to the continent to one favoring trade 
and commercial investment.
    The first priority of AGOA, as written in the legislation, is to 
``promote stable and sustainable economic growth and development in 
sub-Saharan Africa.'' Since AGOA's enactment in 2000, trading relations 
between the United States and Africa have greatly expanded and are 
expected to increase in the near future:

   AGOA has directly created over 300,000 jobs in sub-Saharan 
        Africa and as many as 100,000 jobs in the United States.\5\
   AGOA has indirectly created as many as 1.3 million jobs in 
        sub-Saharan Africa.
   U.S. goods exports to sub-Sahara were $24 billion in 2014, 
        up 250 percent from 2003.\6\
   Exports from AGOA eligible countries to the United States 
        were $25.6 billion, more than four times the amount in 2001.
   U.S. imports from sub-Saharan Africa, excluding energy 
        products, were $4.4 billion representing a nearly threefold 
        increase since 2001.\7\

    While AGOA has provided the framework for enhanced U.S.-Africa 
trade, it would be unwise to merely extend the legislation without 
accounting for the changed economic landscape. AGOA can be enhanced so 
that the potential benefits are maximized for American and African 
businesses.
    AGOA has played a leading role in helping sub-Saharan African 
countries diversify their exports to the United States. However, many 
countries fail to take advantage of the duty-free benefits of the 
preference program. A major focus of improving AGOA is in its 
utilization rate, specifically within nonenergy exports to the United 
States, which have increased by more than 275 percent since 2000--
rising from $1.2 billion to $4.4 billion in 2014. Apparel products 
remain the largest nonenergy category, followed by automobiles and 
other manufactured goods.
    Despite a significant increase of nonenergy related exports to the 
United States, less than $1 million is attributed to over half of the 
40 AGOA beneficiary countries in 2014. The few countries that account 
for the bulk of nonenergy exports include:

   U.S. imports from South Africa totaled $3.1 billion (2014);
   U.S. imports from Kenya totaled $423 million (2014);
   U.S. imports from Lesotho totaled $289 million (2014);
   U.S. imports from Mauritius totaled $227 million (2014).\8\

    AGOA's renewal allows us the opportunity to examine options to 
improve its utilization by African countries and AGOA's long-term 
contribution to the transformation of their economies. Inclusion of new 
agricultural products would be of great value to many agro-based 
African economies. Enhancing and extending the duration of the AGOA 
third country fabric provision is another step the Chamber supports.
    We must also review the U.S. Government's aid expenditures in 
Africa. Some of these funds should be directed to build Africa's 
technical capacity under the AGOA program in a more substantial way 
than currently used.
                    the cost of inaction on renewal
    Unfortunately, AGOA's pending expiration is already undermining 
business and investor certainty. Companies operate with long planning 
horizons, and sourcing decisions are made many months or even years in 
advance. For this reason, the expiration of AGOA in a little more than 
5 months has begun to affect business decisions, and this dampening 
effect on trade will accelerate in the months ahead.
    If the program were to expire, many of the significant gains made 
by African economies would be undermined. By contrast, immediate action 
by Congress for AGOA's renewal would send a strong signal of confidence 
to the U.S. business community and to our potential business partners 
in African countries. It would also confirm our commitment to growing 
the U.S.-Africa economic partnership for the long-term and building on 
its historic economic growth.
    AGOA is central to the dialogue between the United States and 
African countries on two-way trade and investment. Opportunities such 
as the annual AGOA Forum and our bilateral strategic dialogues present 
an opportunity to continually review the trade-preference program as 
well as review the health of our trading relationship. In this vein, we 
must put greater emphasis on the functionality of these events on an 
annual basis and in consultation with the end user; i.e., the business 
community, to determine if they are being used in the most efficient 
manner.
    AGOA gives the U.S. administration the opportunity to conduct an 
annual review to consider whether countries are meeting the Act's 
eligibility criteria, a process that allows the United States to 
positively influence political and economic reforms among AGOA 
beneficiaries. In light of this opportunity, Congress should consider 
whether to enhance AGOA's eligibility criteria in ways that foster 
greater two-way trade. These may include intellectual property 
protections, customs regimes, regulatory and legal standards, and 
measures taken to implement the World Trade Organization (WTO) Trade 
Facilitation Agreement (see below).
    Many other major trading nations have been active in securing 
preferential trade agreements with Africa, including the Economic 
Partnership Agreements of the European Union, as well as agreements 
with Brazil and China. While AGOA is a one-way trade preference 
program, it also represents our primary vehicle for pursuing a broader 
trade agreement securing market access for both the United States and 
Africa. As long as the European Union is the sole recipient of 
reciprocal tariff elimination with several African countries, U.S. 
firms will remain at a competitive disadvantage in these markets. 
Looking ahead, the most significant role of AGOA's reauthorization will 
be in providing a foundation in which our government and business 
leaders can forge a more dynamic trade and investment relationship with 
African countries beyond a one-way preference program.
                the world trade organization and africa
    The Chamber is firmly committed to the global rules-based trading 
system embodied by the WTO. In the view of Chamber members, the 
multilateral trading system embodied by the WTO has benefited the 
entire world, including Africa. Eight successful multilateral 
negotiating rounds have helped increase world trade from $58 billion in 
1948 to $22 trillion today. This is a fortyfold increase in real terms, 
and it has helped boost incomes in country after country.
    While this rising tide of commerce has brought gains for developed 
countries, its most dramatic benefits have accrued to developing 
nations, including Africa. As recently as 1993, 1.9 billion people--
nearly half the world's men, women, and children--lived on $1.25 a day 
or less, in constant 2005 dollars. Since then poverty totals have been 
falling fast. By 2000 the number of people in absolute poverty had 
fallen to 1.7 billion, and the share of world population to 28 percent. 
The most recent estimates issued by the World Bank find the totals down 
to 1.2 billion people and 17.5 percent of population.
    While no single factor explains these income gains, the rise in 
international commerce has by all accounts played a major role. The 
economic growth that trade helps fuel contributes to educating the 
young, building essential infrastructure, strengthening institutions of 
governance, and combating measles, malaria, and other preventable 
illnesses.
                  the wto trade facilitation agreement
    At the Bali Ministerial, trade ministers unanimously endorsed the 
first multilateral trade agreement since the organization's creation in 
1995. The Chamber warmly welcomed the Trade Facilitation Agreement 
(TFA), the principal deliverable in the Bali Package, as a cost-
cutting, competition-enhancing, anticorruption agreement of the first 
order. It promises to streamline the passage of goods across borders by 
cutting redtape and bureaucracy and promoting border modernization for 
customs clearance around the globe.
    The final agreement has surprised observers with its quality as 
countries accepted stronger commitments than had been anticipated. 
Unlike free-trade agreements (FTAs) negotiated by two or several 
parties, the dynamic at the 159-member WTO often leads to the lowest 
common denominator; however the final version of the TFA is still 
impressive. To illustrate, the agreement includes more than 120 
``shalls'' (indicating obligations binding on all parties) and only a 
few dozen instances where governments made weaker ``best endeavor'' 
commitments.
    In a major change for dozens of developing countries--especially in 
Africa--the TFA will require countries to transition fully to modern 
border practices under which goods are cleared through customs 
independently of the final determination of duties and taxes. Countries 
will migrate to electronic processing of required information to allow 
clearance through customs before goods arrive in the country. Countries 
will also look to modernize risk-based targeting.
    The true value of a trade agreement lies in its effective 
implementation. In this process, WTO members will list all the 
provisions they commit to fully implement by the time the Agreement 
enters into force, with the goal of securing the necessary 
ratifications by two-thirds of WTO members by December 2015, when the 
WTO will hold its 10th Ministerial Conference in Nairobi, Kenya--the 
first time this biannual event will be held in Africa. Particularly in 
the case of developing countries, this represents an opportunity to 
highlight a strong commitment to efficient customs and port procedures 
before the global business community and private investors, and bold 
reformers are likely to see economic benefits in the form of increased 
trade, investment, and growth.
    The Chamber is making concerted outreach to governments in Africa 
and elsewhere to encourage them to take on their commitments in a 
fulsome manner and to underscore the international business community's 
keen interest in seeing these reforms advance. We strongly support the 
administration's efforts to ensure the TFA enters into force in a 
timely manner and on the most commercially meaningful terms, and we 
encourage Congress to continue to support these efforts as well.
                       electrify/energize africa
    Another U.S. Chamber legislative priority is the Electrify Africa 
bill, which the House approved in the previous Congress last May. 
Similar legislation in the Senate has been named Energize Africa. 
Insufficient power generation is a leading factor in AGOA's low 
utilization rate which inhibits the growth of businesses and disrupts 
supply-chain networks. This bill would assist countries in developing a 
wide range of power solutions, promote economic growth, and remove a 
major obstacle in the development of many African economies.
    With no additional expenditure by the U.S. Government, the 
Electrify Africa Act would encourage the development of new 
infrastructure to provide access to electricity in sub-Saharan Africa. 
More than 70 percent of the people in the region have no access to 
electricity, with grave consequences. Indoor air pollution from wood 
and dung burning stoves kills more than 3 million people per year--more 
than AIDS and malaria combined. By promoting reliable access to energy, 
this bill would help remove one of the continent's most significant 
barriers to development.
    Given that Africa is home to a number of the fastest growing 
economies in the world, this bill has the potential to generate 
significant new economic opportunities for U.S. companies and the 
workers they employ. Broader access to electricity would allow a larger 
middle class to emerge, providing opportunities for U.S. companies. 
Appropriately, the bill places an emphasis on the role of the private 
sector as it promotes access to electricity. The Congressional Budget 
Office (CBO) estimates that implementation of the Electrify Africa Act 
would save the United States $86 million from 2014-2019.
                       trade promotion authority
    In order to build upon AGOA toward bilateral and regional 
reciprocal trade agreements, Congress must pass Trade Promotion 
Authority (TPA). TPA is a vital tool for the negotiation of new trade 
agreements; without it, the United States has never passed a major 
trade pact. TPA allows Congress to facilitate a revitalized trade 
agenda through three ways: (1) It allows Congress to set negotiating 
objectives for new trade pacts; (2) it requires the executive branch to 
consult extensively with Congress during negotiations; and (3) it gives 
Congress the final say on any trade agreement in the form of an up-or-
down vote. The result is a true partnership stretching the length of 
Pennsylvania Avenue.
    A simple form of TPA was first approved in 1934, but the latest 
version lapsed in 2007. TPA will not only be critical for the success 
of AGOA's legacy but also for the opportunity to move beyond this 
program to a more robust trade agenda with the continent.
                           export-import bank
    The U.S. Chamber of Commerce strongly supports the reauthorization 
of the U.S. Export-Import Bank (Ex-Im), which is a vital part of the 
American economy, especially to the small- and medium-size businesses. 
Ex-Im supports over 150,000 American jobs at 3,000 companies that 
depend on the Bank's services in order to compete in global markets. 
Failure to reauthorize Ex-Im would put at risk hundreds of thousands of 
American jobs and would hurt many small- and medium-size businesses. 
Without the Bank's services, American companies would lose crucial 
support overseas and fall behind foreign competitors.
    Sub-Saharan Africa is a priority region for Ex-Im Bank, with over 
$2.05 billion in transactions in over 20 countries being supported by 
Ex-Im Bank in 2014. Since 2009, Ex-Im Bank has supported over $6.6 
billion in transactions throughout sub-Saharan Africa.\9\ In addition, 
section 124 of AGOA directs Ex-Im Bank to expand its financial 
commitments of its loan guarantee and insurance programs to African 
countries and supports Ex-Im's Africa Advisory Committee in fostering 
economic cooperation between the United States and sub-Saharan Africa. 
However, the Advisory Committee was not authorized in the most recent 
reauthorization of Ex-Im Bank and remains nonoperational.
    The impending expiration of Ex-Im Bank as well as the current 
nonoperational status of the Africa Advisory Committee threatens the 
competitiveness of American firms in doing business in Africa. 
Countries such as Brazil, China, France, Germany, India, and Korea have 
their own equivalents of Ex-Im, and in recent years they have provided 
two to ten times the level of support for their exporters that 
Ex-Im has provided to American firms. If Ex-Im Bank including its 
Africa Advisory Committee are not reauthorized, U.S. companies would be 
at a sharp disadvantage in many African markets.
                            recommendations
    Given the rising importance of Africa to the United States, the 
Chamber urges that Congress and the administration consider these 
recommendations:

    Extend AGOA beyond 2015: An extension of AGOA would benefit both 
the United States and all AGOA-eligible countries by providing greater 
predictability and stability for U.S.-Africa trade. In order to 
maximize AGOA's potential and to take into account the dynamic economic 
environment on the continent, the legislation should receive multi-year 
renewal.
    Expansion of Product Coverage: The AGOA program excludes many 
products that could be of great value for trade with sub-Saharan 
Africa, and Congress should consider what products can usefully be 
added. The Chamber also supports the extension of AGOA's third country 
fabric provisions.
    Review AGOA's Eligibility Criteria: AGOA should take into account 
the deliberate trade and investment actions of African governments. 
With the goal of enhancing economic growth and development, AGOA should 
encourage efforts to promote trade facilitation, expand market access, 
protect intellectual property, extend fair treatment to foreign 
investors, and enhance the business climate in other ways.
    Move Toward Regional Trade Agreements: To maximize the potential 
benefits of U.S.-Africa trade relations, U.S. officials should consider 
how to use AGOA as a vehicle to move beyond a one-way preference 
program and toward bilateral and regional reciprocal trade agreements.
    Pass Trade Promotion Authority: Trade Promotion Authority would 
drive economic growth and job creation in the United States through the 
negotiation of critical trade agreements. TPA will be a necessary tool 
for enhancing trade relations with African nations as we pursue 
bilateral and regional reciprocal trade and investment agreements on 
the continent.
    Press for Swift Implementation of the WTO Trade Facilitation 
Agreement: The U.S. Government and business community should continue 
to press African nations to embrace a fulsome list of their commitments 
under the TFA to highlight their commitment to efficient customs and 
port procedures. Governments doing so would signal to the global 
business community their clear intent of real economic reform.
    Approve the Electrify/Energize Africa Act: The Electrify Africa Act 
would encourage the development of new infrastructure to provide access 
to electricity in sub-Saharan Africa. By promoting reliable access to 
energy, this bill would help remove one of the continent's most 
significant barriers to development and would allow a larger middle 
class to emerge, providing a wide range of opportunities for U.S. 
companies in years to come.
    Reauthorize the Export-Import Bank: The Export-Import Bank remains 
a vital part of the American economy and enables American firms to 
successfully compete in African markets. Reauthorizing Ex-Im and its 
Africa Advisory Committee would ensure assistance to American companies 
exporting to Africa.
                               conclusion
    The Chamber thanks the leadership of the Senate Subcommittee on 
Africa and Global Health Policy for convening this hearing on the 
African Growth and Opportunity Act. We look forward to working with 
Congress and the administration to advance the next reiteration of AGOA 
in order to further the trade and investment relations between the 
United States and the countries of sub-Saharan Africa.

----------------
Notes

    \1\ Data from International Monetary Fund, ``World Economic 
Outlook,'' October 2014.
    \2\ Data from http://dataweb.usitc.gov/africa/trade_data.asp.
    \3\ African Development Bank, ``The Middle of the Pyramid: Dynamics 
of the Middle Class in Africa,'' 2011.
    \4\ USTR, ``Remarks by United States Trade Representative Michael 
Froman to the U.S. Global Leadership Coalition,'' press release, June 
25, 2013.
    \5\ Office of Congressman Chris Smith, ``African Diplomats Present 
AGOA Recommendations to Foreign Affairs Committee.''
    \6\ Data from http://dataweb.usitc.gov/africa/trade_data.asp.
    \7\ CRS, ``African Growth and Opportunity Act (AGOA): Background 
and Reauthorization,'' 2015.
    \8\ Ibid.
    \9\ Export-Import Bank, Africa (Sub-Saharan):http://www.exim.gov/
about/whatwedo/markets/ 
africa/.

    Senator Flake. Thank you, Mr. Eisner.
    Mr. McRaith.

 STATEMENT OF WILLIAM McRAITH, CHIEF SUPPLY CHAIN OFFICER, PVH 
                      CORP., NEW YORK, NY

    Mr. McRaith. Good morning. Chairman Flake, Ranking Member 
Markey, and distinguished members of the Senate Foreign 
Relations Africa Subcommittee, on behalf of PVH, I would like 
to begin by thanking you for your work on the recent 
introduction of the AGOA Extension Enhancement Act of 2015.
    There are several portions of the bill that are of great 
interest to PVH and the overall business community, not the 
least of which is the decision to extend the United States 
partnership with Africa for the 10-year period. Large 
investments by U.S. companies in Africa that can have the most 
significance in job and economic generation on both continents 
depend in a large part on this lengthy AGOA renewal.
    To start, allow me to introduce myself and the company that 
I represent. My name is William McRaith. I am the chief supply 
chain officer for PVH. The story of PVH starts with Moses 
Phillips and his wife, Ida, mending and selling shirts for 
local coal miners in a small town in Pennsylvania, and has 
grown to become one of the largest apparel companies in the 
world with over $8 billion in revenues in 2014, employing 
approximately 16,000 people in the USA and 14,000 people 
globally.
    PVH is now headquartered in New York with distribution 
sales in other corporate locations in California, Georgia, 
North Carolina, New Jersey, New York, Nevada, Pennsylvania, and 
Tennessee. Among other PVH brands include Calvin Klein, Tommy 
Hilfiger, Van Heusen, ARROW, IZOD, Warner's, Olga, and Speedo.
    We are a dedicated global corporate citizen. Today there 
are over 4,000 retail locations that we have outside of the USA 
where our brands are sold. As we expand throughout the world, 
we have made an unwavering commitment to corporate social 
responsibility, which we believe can be a key competitive 
advantage as well as just the right thing to do.
    My message today is simple and straightforward: Africa 
today is prime to receive the type of large private sector 
investment that will generate the economic growth we all 
envisage for Africa. The present infrastructure of global 
supply chains is changing fast and changing before our eyes, 
and soon large portions of the world's supply chains, mostly 
that which is currently based in Asia, will shift and soon be 
based in regions of Africa. Ensuring the presence of U.S. 
investment in Africa is crucial as this will not only generate 
economic growth for the United States, but it also creates jobs 
and exports U.S. values and business practices that are much 
needed in Africa.
    U.S. businesses have been mostly absent from Africa to 
date. China is in Africa in a very large way mainly extractive 
in nature, but in turn is building the infrastructure of many 
of these countries. The European Union has also been involved. 
The U.S. presence is mainly in the form of assistance through 
legislation that seeks to build the trade capacity and 
facilitation mechanism in sub-Saharan Africa, combined with a 
10-year AGOA extension, the United States is now shifting from 
merely an aid to a trade position.
    Greater U.S. presence in Africa will also help develop an 
economic partnership and association needed to press for 
deepening of trade relations beyond the current policy of 
unilateral trade preference. We have seen this happen in 
countries in the Caribbean and the Latin America region who in 
the past enjoyed unilateral trade preferential relations 
through programs like the Caribbean-Based Initiative and the 
Andean Trade Preference Act. And with time, these relations 
blossomed and provided the political impetus needed to move 
towards a more lasting, deeper, and bilateral trade 
relationship with free trade agreements.
    A little bit of our story in Africa. So approximately a 
year ago, we went to Africa. We actually took a trade 
commission to Africa with a number of our partners. On that 
trip, the companies that we took were persuaded, and the best 
description I would give of them is they were highly skeptical. 
In fact, the vast majority of them were just downright cynical 
on any opportunity that might exist in Africa mainly as a 
result of bad trips in the past. What we saw this time around 
really changed everyone's mind. We have always known of 
Africa's great, but raw, potential, form of resources. But 
aspects related to good government have in general always 
been--has had much to desire.
    This time was very different. The countries we visited 
demonstrated that we had laid the foundations necessary to 
track significant foreign and direct investment, and we were 
prepared to undertake--and they were prepared to undertake the 
commitments necessary to ensure social responsible companies 
like ourselves can enter. The level of professionalism, 
commitment, and maturity that we are seeing from some 
governments in Africa reassure of our interest not only to 
source from Africa, but also to produce in Africa.
    As a result of our trip, we identified a great opportunity 
for the industry to invest nearly a billion dollars to create a 
vertically integrated apparel supply chain in some regions of 
Africa, in other words, to create jobs in Africa, not just in 
apparel, but also in textiles and even the agricultural 
industry through better cotton production techniques.
    Moving forward, as we plan to invest in countries in 
Africa, we plan to do it through a more inclusive model of 
investment and growth in which we will be able to put in place 
right from the very beginning facilities, norms, and values 
that will guide the work of the factories, the relationships 
between workers, managers, associations, civil rights 
societies, governments, and other stakeholders. In all 
communications with African leaders and officials we have 
stressed that PVH is not interested in making a quick buck, but 
in establishing a lasting presence in the country. In order to 
do so, they must equally be committed to upholding the 
sustainable social standards we require across all sectors and 
all investors who participate. As I mentioned previously, some 
indicated that they actually want partners like PVH to help 
them to implement these practices.
    We think the 10-year extension is a great start for PVH, 
and we are very pleased with the bill as introduced. However, 
we submit that while we have the chance to make changes to the 
bill we should consider a couple of additional simple 
modifications. We applaud the provision introduced with the 
proposed language that allow for a 60-day notification to 
Congress, and we assume the business community knows of a 
proposed termination to terminate a country's eligibility. 
However, in practice a 6-month timeline may be more effective. 
Secondly, an important change would be to remove the visa 
requirement. Current apparel shipments require a visa to 
accompany each shipment. This requirement of quota system is 
outdated and unnecessary.
    Congress must work hard and in hand with the business 
community by passing a long-term AGOA extension. We look 
forward to working with the members of the subcommittee, other 
Members of Congress, with the administration to share our 
business perspective and ensure that we do not lose the 
momentum and this tremendous opportunity that awaits Africa.
    As someone who has been involved in global operations for 
over two decades, I always have to ponder the question, where 
is the next region of growth? I believe we have the answer. It 
is Africa.
    I thank you again for this opportunity, and I look forward 
to discussing it further and answering any questions you may 
have. Thank you, Mr. Chairman.
    [The prepared statement of Mr. McRaith follows:]

                 Prepared Statement of William McRaith

             agoa extension will boost investment in africa
    My comments today represent the views of PVH, although I'm certain 
that they reflect the thoughts of many other companies. In short, my 
message is simple and straightforward: Africa today, is primed to 
receive the type of large private sector investments that will generate 
the economic growth we all envision for Africa. The present 
infrastructure of global supply chains is changing before our eyes and 
soon large portions of the world's supply chain, mostly what is 
currently based in Asia will shift and be based in regions of Africa. 
The proposed 10-year extension of AGOA sends a message to U.S. 
companies that their investment in sub-Saharan Africa will be given 
sufficient time to turn a profit. Ensuring the presence of U.S. 
investment in Africa is crucial as this will not only generate economic 
growth for the U.S., but it also helps create jobs and export U.S. 
values and business practices that are much needed in Africa.
    Quite frankly, heretofore, the U.S. has been mostly absent from 
Africa. China is in Africa in a very large way, mainly extractive in 
nature but in turn is building the infrastructure of many countries. 
The EU has been involved at a ``commercial'' level which enabled them 
to recently reach agreements with many sub-Saharan countries for an 
eventual reciprocal free trade agreement. The U.S. has mainly shown 
only an ``assistance'' presence in Africa. It is time now to move from 
``aid'' to ``trade.'' The electrify Africa initiative and other 
legislation that seeks to build the trade capacity and facilitation 
mechanisms in sub-Sahara Africa combined with the 10-year AGOA 
extension will embolden U.S. investors to enter those markets.
    With U.S. investment comes the export of good business practices. 
We export good business standards, worker rights policies and do not 
allow corruption. These basic standards are why the queue to work at a 
U.S. brands or U.S. company abroad are many times longer than that of 
other foreign investors. Workers know that they will be treated fairly 
by U.S. companies.
    It is important to note as well that over time, greater U.S. 
presence in Africa will also help develop the economic partnerships and 
associations needed to press for deepening our trade relations beyond 
the current policy of unilateral preferences. This extension will allow 
us time to create incentives to link the business communities of the 
two continents through AGOA. The U.S. has already seen this happen for 
example with countries in the Caribbean and Latin America, where after 
decades of unilateral trade preferences relationships through programs 
like the Caribbean Basin Initiative or the Andean Trade Preferences 
Act, the business relationships blossomed and provided the political 
impetus needed to move toward more lasting, deeper and bilateral trade 
relations.
    I fully realize that Africa is a vast region, with many countries 
still struggling mightily to achieve a modicum of the stability and 
investment potential that I just described. That is why despite the low 
costs of labor in Africa, many companies, including PVH, have been 
hesitant in the past to invest or move production there. However, I 
strongly believe that as more and more countries in Africa start seeing 
the growth and success of their neighbors, they will move toward making 
the changes necessary to take part in the success that can be achieved 
through strong governance and foreign direct investment. The changes in 
Africa are likely to take place first in specific regions and clusters 
and then spread out to others areas of the continent.
                our recent business adventure to africa
    PVH has been monitoring Africa for several years as a potential 
location for production, as we sought to identify opportunities to 
improve our supply chain. The company has been a pioneer in driving 
investment and development, and we like to be the first into an area to 
help establish the workplace rules to be followed by future investors 
and market participants.
    Let me share with you a story about a trip we made to Africa 2 
years ago. PVH organized the trip and invited several other companies 
in the apparel and textile sector to conduct an exploratory business 
mission to countries in East Africa. Many of the companies we invited 
were hesitant to make the trip, being either skeptics or downright 
cynics, given that similar missions in the past had not yielded much 
success. Leveraging our long-term relationships, we convinced them to 
come with us and give it another chance.
    What we saw this time around changed everyone's mind. We have 
always known that Africa has great but raw potential in the form of 
resources. But aspects related to good governance have in general 
always left much to be desired. This time it was different. The 
countries we visited demonstrated that they had laid the foundations 
necessary to attract significant foreign direct investment and were 
prepared to undertake the commitments necessary to secure socially 
responsible companies. The Ministers and key government officials with 
whom we met were passionate in sharing their vision of growth for their 
countries. They spoke of adherence to the rule of law, free markets, 
government stability, and transparency. They highlighted major and well 
thought out modern infrastructure projects that were recently completed 
or about to be finalized. They understood and showcased the economic 
advantages that their countries have compared to others in the sub-
Saharan region. Most importantly, they spoke about their commitment to 
their people by bringing investment and education to the country that 
will truly touch--for good--the lives of their citizens.
    The level of professionalism, commitment, and maturity that we are 
seeing from some governments in Africa reassures our interest to not 
only source from Africa, but to produce in Africa. Every one of the 
other companies we had initially cajoled to join us on the trip agreed 
that Africa is ready for significant investment. They, and I, saw the 
opportunities that reminded us of some apparel production powerhouses 
today--and where they were 20 years ago. As a result of our trip, we 
identified a great opportunity for the industry to invest nearly a 
billion dollars to create a vertically integrated apparel supply chain 
in some regions of Africa. In other words, create jobs in Africa not 
just in apparel, but also in the textile and even agricultural industry 
through better cotton production techniques.
    While much work remains to be done, the initial foundations are 
there. As a result, Congress must send an unequivocal signal to the 
investor and business community that it truly is interested in seeing 
Africa develop and stand on its own two feet by promptly approving the 
bill that will extend AGOA. AGOA preferences are the thread that will 
keep together Africa's enormous potential.
  pvh is interested in building values and a new production model in 
                                 africa
    Apparel production has generally been one of the first industries 
to invest in low-income countries. It is undeniable that there are 
significant cost advantages that come to companies sourcing from 
Africa, but this is not the only motivator or factor that PVH considers 
in making strategic decisions about the countries where we place 
production. Over the last 30 years, we have seen the great good that 
can come to these countries from the jobs created and the economic 
boost that our industry gives these countries. On the other hand, it is 
undeniable that there have been instances in which costly and even 
tragic mistakes have been made.
    The apparel industry's mistakes of the past have often been the 
result of near-sighted investment in lawless environments. That model 
must and will change rapidly. For PVH, the value of our company is in 
the public's perception of our brands, thus we cannot risk our 
reputation being tarnished by pursuing short-term growth strategies 
when it comes to our sourcing decisions. PVH is interested in being a 
partner in a long-term strategy for growth in the countries where we 
operate and with the people who work with us. We want to be in places 
where we can install not just good factories, but codes of conduct, 
values, environmental sustainability, positive worker relations, and 
the highest business and ethical principles to ensure the long-term 
success of our commitments.
    As a result of this commitment by PVH, countries in Africa where we 
invest will be the beneficiaries of a new and more inclusive model of 
investment and growth in which we will be able to put in place, right 
from the beginning, facilities, norms, and values that will guide the 
work at the factories and the relationships between workers, managers, 
associations, civil society groups, governments and any other 
stakeholders. That is why when we look at Africa we do not just look 
for a place to quickly set up a sewing operation. We know that to be 
successful you need to have a clear line of sight throughout your 
entire supply chain structure. To that end, we are identifying our best 
global supplier partner companies to join us on this journey. These are 
entities with which we have developed long and trusting relationships. 
We know that they meet PVH corporate social responsibility standards 
and are companies that we can trust to work with us in our mission.
    Further, in all our communications with African leaders and 
officials, we have stressed that PVH is not interested in making a 
quick buck, but in establishing a lasting presence in their country. In 
order to do so, they must be equally committed to upholding the 
sustainable social standards we require across all sectors and with all 
investors and participants. We have asked those governments to review 
their Corporate Social Responsibility code at all levels and develop 
both educational and enforcement programs to ensure compliance. We 
asked each of them how they wanted the Brand name of their country to 
be thought of 10 years from now as the decision they made would 
ultimately determine the answer. As I mentioned previously, some 
indicated they want partners like PVH to help them implement these 
practices as the baseline standards in their country.
                  africa can be vertically integrated
    The possibilities for investment in Africa are there and we need to 
encourage U.S. companies to lead the way to investment because after 20 
years of learning, we are positioned today to bring good business 
practices, standards, and ethics to the region. I mentioned earlier 
that based on our recent trips to Africa, coupled with our experience 
with supply chains around the world, has lead us to explore an 
investment path in Africa where the countries where we have presence 
will be more than just seamstresses. Instead we envision becoming the 
world's first example of how to proactively build a fully vertical, 
ground to finished product, socially responsible supply chain.
    The old model of only cutting and sewing operations that can be 
installed and removed with relative ease does not fit with our vision 
of Africa. Africa can attract investment in other added value processes 
in apparel production such as cotton growing, yarn-spinning, weaving, 
and logistical operations. Cotton growing is a main staple in several 
African countries. Further, for man-made fibers they have the petroleum 
and natural fiber basics such as bamboo that can be converted to 
apparel yarns. In many countries, English is the primary or one of the 
top three primary languages, which makes it easier to train workers and 
future managers. When political and policy stability is added to this 
mix, we see no reason why some regions in Africa cannot developed into 
fully vertically integrated value chains.
                 other areas in which the u.s. can help
    In addition to a long-term renewal of AGOA, there are other ways by 
which the U.S. can partner with Africa to achieve a fully vertically 
integrated model of production. For instance, there is cotton 
production in Africa today, but is very inefficient and of poor quality 
compared to the high yields and high quality cotton produced in other 
areas. Many countries in Africa have been forced to source from Asia in 
recent years despite their fertile grounds and historic tradition as 
cotton growers. This can be changed by creating partnerships between 
developed and developing countries in Africa that would help transfer 
know-how to African farmers and facilitate the move from artisan to 
technologically advanced methods of growing and harvesting. Helping 
them to implement farming practices that use less water, less 
pesticides, and have higher yields per acre will leapfrog them into the 
21st century. Implementing harvesting practices that use machines 
rather than people will help minimize labor risk potentials. 
Instituting cotton grading practices that mimic our own system will 
help ensure quality product and reliability for purchasers.
    Training workers and management is also essential and this is 
another area where developed countries' know-how can prove crucial. 
Allowing employees access to visas to travel to the U.S. for training 
in our practices and systems will enable us to ensure that best 
practices are exported and put in place globally. Trade infrastructure 
projects are critical, and in this regard we salute current 
congressional efforts to promote energy investments in Africa. We also 
support the Trade Facilitation Agreement signed in Bali last year and 
look forward to its implementation. Creating support to the sub-Saharan 
nations to build an intraregional connectivity that will allow goods 
necessary for apparel production to transit the continent seamlessly 
will enhance the attractiveness of the continent and prevent each 
nation having to be completely vertically integrated on its own.
              conclusion--it all starts with agoa renewal
    Congress can be a great catalyst for growth as well by matching the 
long-term commitment expected from the private sector by approving a 
lengthy extension of the AGOA program. Companies cannot commit to 
individual investments ranging in the hundreds of millions of dollars 
unless they have more certainty about the rules in place. We are 
embarking on these types of investment. However, it will take 12-24 
months to set up very expensive yarn spinning, fabric weaving/knitting 
and apparelmaking facilities. We then need to train workers on the use 
of complicated machinery, build production capacity and be able to have 
benefits long enough to cover the full depreciation of our investments 
which takes in the ideal world 8 years . . . if we have any delays 
along the way, we will need the full 10-year period to recoup costs. 
The proposed 1-year AGOA extension is a strong signal showing that 
Congress is working with the private sector in helping Africa develop 
and diversify into economic independence.
    We think the 10-year extension is a great start. There are some 
other changes that could be added which will make the program easier 
and more predictable. We applaud the provision in the proposed language 
that will allow for a 60-day notification to Congress and we assume the 
business community of a proposed determination to terminate a country's 
eligibility. However, in practice, the time needed to clear the 
production channel is 6 months. We would like to see this provision 
amended to allow 6 months notice. We can use that time to both unwind 
our production and to pressure the host government to take remedial 
action prior to the end of the 6 month period.
    Secondly, an important change would be to remove the visa 
requirement. Currently, apparel shipments require a visa accompany each 
shipment. This can be electronically transmitted but it is a 
``barrier'' to entry. It is a ``sink'' for possible government 
corruption. It requires financial investment of the foreign 
governments. It is a remnant of the quota system that was eliminated in 
2005 . . . it is outdated and unnecessary.
    PVH believes not only that Africa has great potential, but we 
believe that there are countries in the region that are ready to 
welcome the types of partnerships and investments that will yield 
significant economic gains in the next two decades. These economic 
gains will be accompanied by positive social changes in those 
countries, as they adopt the business and ethical values and practices 
that are the basis for attracting PVH and companies like us. With the 
right set of policies in place, Africa can also change the model of 
apparel sourcing by having a fully integrated supply chain that 
includes man-made fibers, cotton, yarn, textile, and apparel 
production. Congress must work hand in hand with the business community 
by passing a long-term AGOA extension. We look forward to working with 
the members of this subcommittee, other Members of Congress and with 
the administration to share our business perspective and ensure that we 
do not lose momentum in the tremendous opportunities that await Africa. 
As someone who has been involved in global operations, I always ponder 
the question of where is the next region of growth. I believe we have 
the answer: It is Africa.
    I thank you again for this opportunity and look forward to 
discussing it further and answering any questions you may have. Thank 
you Mr. Chairman.

    Senator Flake. Thank you, Mr. McRaith. Mr. Williams?

  STATEMENT OF WALKER WILLIAMS, PRESIDENT AND CHIEF EXECUTIVE 
         OFFICER, LEADERSHIP AFRICA USA, WASHINGTON, DC

    Mr. Williams. Yes. Thank you, Chairman Flake. The 
opportunity to testify is very important to me because 15 years 
ago I had the privilege of working on the first AGOA program, 
and I am happy to say, and I will not go over what has been 
said by my fellow witnesses, that AGOA is and has been a 
success. In my view, it is the most comprehensive of all U.S. 
trade preference programs, providing preferential access to the 
U.S. market for a wide range of products. I sincerely believe 
AGOA has become the foundation of the United States-Africa 
relationship, and has accomplished its goal to shift our focus 
to include trade and investment.
    The mission of AGOA and the private entities when it was 
launched 15 years ago still rings true today. It was to 
increase trade and investment, to strengthen the private 
sector, to reduce trade barriers, to support the rule of law, 
to reduce poverty, to provide economic reform, and to encourage 
regional integration.
    Now, Mr. Chairman, I have been asked to address briefly 
three issues, AGOA's impact. I do not think I need to dwell on 
that too much because it has been covered by other witnesses, 
the challenges, and the approach to possibly changes that might 
enhance the U.S. position in the region.
    Now, before I begin my remarks I would like to put on the 
record that Leadership Africa USA has been working since 2013 
with African Ambassadors Group to renew AGOA. And we have 
recently launched the AGOA Action Committee and a Call to 
Action with Watts Partners, Bechtel, Chevron, the Corporate 
Council in Africa, the U.S. Chamber of Commerce, and key civil 
society organizations and several corporations, all supporting 
the reorganization of AGOA and beyond.
    The three issues: AGOA has successfully increased two-way 
trade with Africa. Under AGOA, total exports from sub-Saharan 
Africa have tripled, and the amount of U.S. direct foreign 
investment has almost quadrupled. The good news and indeed more 
on the way--when Congress finally passes the AGOA Extension 
Enhancement Act of 2015. I support the actions of congressional 
leaders who put forward a bipartisan bill composed by the 
Senate Finance Committee and the House Ways and Means 
Committee. It references key AGOA issues, like extension, 
regional integration, eligibility, reporting, capacity-
development, along with several other key trade issues.
    Yesterday I had the privilege of listening to and 
witnessing the U.S. Senate Committee on Finance complete a 
markup of AGOA, GPS, and extend preferential duty program for 
Haiti. These actions to me signal that a legislative movement 
is underway for getting AGOA authorized sooner rather than 
later, and one that I applaud with this congressional action.
    Extension. I just want to make a comment on extension: 15 
years versus 10 years. Leadership Africa USA, continues to 
support a longer renewal of 15 years, which has been suggested 
and is attractive to the business community because it provides 
predictability and certainty for investors, businesses, and 
most especially local businesses and women-owned businesses in 
Africa who would like to get into export and do business with 
the United States.
    It also allows for supply chain development, and to do that 
several industries, particularly textiles and agriculture, need 
a longer timeline. I believe a longer timeline for AGOA's 
renewal to provide maximum investment in trade, and create 
jobs, and provide ownership opportunities for SMEs in America.
    Eligibility, we are addressing that, and we recently had 
conversations about South Africa, and that points to the 
direction that we need to clarify eligibility and how we 
determine eligibility and annual reviews. It is a very 
important subject, and it lends clarity to the business 
community because they know what and how eligibility is going 
to be addressed, and it precludes surprises. So I am suggesting 
that I like what I heard from Senator Isakson yesterday, and I 
support the direction that he is moving in, and I think that it 
is a good solution because if you want regional integration, we 
need to keep South Africa in the mix with AGOA.
    Capacity-building is very important as is infrastructure. 
We cannot have an Africa and an AGOA without infrastructure, 
and infrastructure should include energy, health, education, 
and, most importantly, power. I mean, there are 600 million 
people in Africa without electricity, and that is critical to 
AGOA's success.
    I will close by saying I thank you for this opportunity, 
and I look forward to your questions.
    [The prepared statement of Mr. Williams follows:]

                Prepared Statement of Walker A. Williams

    Mr. Chairman and members of the Subcommittee on Africa and Global 
Health Policy, I thank you for this opportunity to testify before your 
committee and also for all of the support this committee has provided 
to Africa.
    As President and CEO of Leadership Africa USA (LA USA) with a 
professional background of over three decades of experience addressing 
major African development issues which include advocacy activities 
directly related to the formal launching of AGOA on May 18, 2000. In my 
opinion, AGOA is still the most comprehensive of all U.S. trade 
preference programs benefiting 40 countries in sub-Saharan Africa (as 
of January 2015) eligibility for preferential access to the U.S. market 
in a wide range of products. It has become a flagstone of the U.S.-
Africa relationship and has successfully shifted the U.S. focus to 
trade and economic issues. The policy priorities of AGOA when launched 
in 2000 still ring true today--to increase trade and investment; 
strengthening the private sector; reducing trade barriers; supporting 
the rule of law; poverty reduction; economic reform; and encouraging 
regional integration in Africa.
    Mr. Chairman, I have been asked to address three issues:

   AGOA's role in promoting economic growth and investment in 
        Africa;
   Challenges to expanding African exports; and
   AGOA's impact and the U.S. approach to the region in a 
        changing global trade environment.

    Before I begin my testimony I want to reference for the record 
Leadership Africa USA's AGOA efforts working with the African 
Ambassadors Group's AGOA renewal efforts and more recently our 
launching of the AGOA Action Committee and the ``Call to Action'' 
campaign with Watts Partners, Bechtel, Chevron, the Corporate Council 
on Africa, the U.S. Chamber of Commerce and major civil society 
organizations supporting Africa.
                     economic growth and investment
    AGOA has successfully increased two-way trade with Africa in many 
sectors such as horticulture, apparel, automobiles, ferroalloys, cocoa, 
chocolate and confectionary products. Under AGOA, total exports from 
sub-Saharan Africa have tripled and as AGOA countries improve their 
business and investment climate, the amount of all U.S. FDI has almost 
quadrupled. AGOA has also supported the diversification of sub-Saharan 
African economies; since 2001, nonoil, nonmineral exports under AGOA to 
the United States have increased almost fourfold, but at only $5 
billion, there is much room for growth. AGOA has also created 
approximately 350,000 direct jobs and 1,000,000 indirect jobs in Africa 
and 100,000 jobs in the United States.\1\
    Earlier this year, U.S. Trade Representative (USTR) Michael Froman 
succinctly summed up AGOA's success as follows: ``Under AGOA, total 
exports from sub-Saharan Africa to the United States have tripled and, 
as AGOA countries improved their business and investment climates, the 
stock of U.S. FDI has almost quadrupled. AGOA has also supported the 
diversification of sub-Saharan African economies; since 2001, nonoil, 
nonmineral exports under AGOA to the United States have increased 
almost four-fold, but at only $5 billion, there is much room for 
growth.\2\
    Despite many AGOA success stories, we believe more needs to be done 
to bolster Africa's participation in the global economy.
        agoa: issues and opportunities to expand african exports
    The reauthorization of AGOA presents the 114th U.S. Congress a 
historic opportunity to assess key issues and AGOA's policy objectives 
going forward along with several program challenges that should be 
addressed as part of a enhanced AGOA. Many of the changes and key 
issues being contemplated by this Congress in the AGOA Extension and 
Enhancement Act of 2015 are raised in my testimony to address several 
key AGOA issues under discussion. The key AGOA issues I have included 
are; Program Duration, Program Coverage, Eligibility, Export 
Diversification, Trade, Increasing Investment, Capacity-Building, 
Regionalization and Communications.
Issue: Program Duration
    We support the actions of key congressional leaders on April 16, 
2015, who put forward a bipartisan bill cosponsored by the Senate 
Finance Committee and the House Ways & Means Committee--``AGOA 
Extension and Enhancement Act of 2015'' which referenced issues like 
AGOA's extension, regional integration, eligibility criteria, AGOA 
certainty, AGOA beneficiaries utilization strategy, expanding trade and 
investments, etc. Also included as part of the AGOA Extension and 
Enhancement Act of 2015 was renewal of the Generalized System of 
Preferences (GSP) program and extension of the Preferential Duty 
Treatment Program for Haiti.
            AGOA Extension
    While AGOA has contributed to market growth, missed opportunities 
occur as a result of short or unpredictable project duration. One of 
the most critical considerations is the amount of time it takes for 
investment to take root or supply chains to expand. All supply chains 
need time to develop and companies will not invest in cross-border 
supply chains if they are not assured that their investments have a 
chance at success. AGOA can help defray this risk if it remains in 
place long enough. Ten years has been cited as the absolute minimum for 
even the most straightforward supply chain, but sectors like 
agriculture take even longer to develop. In the textiles and apparel 
sector, for example, investments typically are planned over 10-year 
periods, and returns on investment take 2 or more years.
    We support a longer renewal of 15 years which has been suggested 
and is attractive to the business community because it provides 
predictability and certainty for investors and businesses and helps 
reduce commercial risk. For many small- and medium-sized entrepreneurs 
(SMEs) the cost of exporting to the U.S. may be prohibitive absent 
trade preferences. Sufficiently long renewal periods reduce risk for 
SMEs and other businesses because they know costs won't change 
unpredictably. In sectors such as apparel and others, orders have a 
relatively long lead-time, which requires longer, more predictable 
project duration. As others such as the Brookings Institution have 
noted, a long renewal period would also allow time to consolidate the 
gains of the past; make opportunities more predictable, and the 
relationship more participatory and less unilateral; ensure mutual 
benefits; be responsive to the transformative priorities of sub-Saharan 
African countries; and remain supportive of the regional integration 
agenda.
    Also related to the debate on AGOA's duration is a larger question 
around whether trade preference programs should be replaced with two-
way free trade agreements (Free Trade Agreements, or ``FTAs''). This 
discussion will continue to increase as preference margins erode (due 
to FTAs and WTO trade liberalization) and as Africa's preferential 
trade agreements with the U.S. and other trading partners, particularly 
Europe are signed.
    The United States already has Trade Investment Framework Agreements 
(TIFAs) with several AGOA eligible countries and Regional Economic 
Communities that are designed to spur private sector investment, 
increase trade, and facilitate dialogue on areas of mutual interest. 
According to the Brookings Institution, the AGOA countries with 
existing TIFAs enjoy a proportionally large share of the total exports 
under AGOA.\3\ I also support increased use of TIFAs and greater 
integration of the business community in the TIFA process. Moreover, 
the African Union has suggested that U.S. policy rely more on TIFAs to 
gain better market access in countries like South Africa instead of 
resorting to AGOA graduation policies which could reverse regional 
integration efforts and potentially undo the progress made under AGOA.
            Third Country Fabric Provision
    The Third Country Fabric (TCF) Provision is a flexible rule of 
origin that allows AGOA beneficiary countries to receive preferential 
treatment for goods manufactured with fabric or yarn from non-AGOA 
countries and is also set to expire in 2015. The TCF provision has 
proven to be critical to supporting the growth in the textile and 
apparel sector, which has been accelerated by AGOA and is an important 
industry for a growing number of AGOA beneficiaries. The fastest-
growing African exporters of apparel under AGOA from 2005-11 were Cape 
Verde, Ethiopia, Kenya, Lesotho, Madagascar, and Togo. In 2004, Kenya, 
Lesotho, Madagascar, and Swaziland relied upon the TCF provision to 
export 90 percent of textile and apparel goods under AGOA. Without the 
TCF provision, countries that rely on imported fabric to produce 
apparel would no longer be able to access U.S. market. USTR has urged 
Congress to renew AGOA and third country fabric provisions long enough 
``to encourage meaningful investment and sourcing'' \4\ and the AGOA 
Ambassadors Working Group recommends reauthorization ``for a 
significant enough period of time (15-20 years) to inspire investor 
confidence and allow opportunities to take root and grow.'' The same 
applies to the Third Country Fabric Provision. The Ambassadors also 
note ``if the prevailing economic growth rate in SSA is used as a base 
rate, it could take African LDCs a minimum of 20-25 years to reach the 
lower income level and develop the capacity to trade globally.''
    The African Union recommends that the TCF provision be extended 
concurrently with AGOA because the continued success of the textiles 
and apparel industry in sub-Saharan Africa is dependent on the 
provision's flexibility.
    The Textiles and Apparel and Retail Industries have advocated for a 
long renewal because ``[s]hort-term renewals don't provide enough 
certainty to enable industry to make capital-intensive investment 
decisions necessary to attract textile and footwear investments or 
affect long-term sourcing partnership decisions.'' \5\ For the apparel 
industry, orders alone must be placed approximately 9 months in 
advance. The textiles and apparel industry has also argued that AGOA's 
third country fabric rule be concurrent with AGOA's duration and 
renewed for an extended period of time. Included in this group are:

   American Apparel and Footwear Association (AAFA);
   National Retail Federation (NRF);
   African Cotton and Textile Industries Federation (ACTIF);
   United States Fashion Industry Association;
   Retail Industry Leaders Association (RILA); and
   Outdoor Industry Association.

    Business groups like the Corporate Council on Africa (CCA) and U.S. 
Chamber of Commerce do not offer a specific time period for renewal, 
but CCA has urged Congress to establish the program for a period ``long 
enough to establish meaningful investment opportunities.'' The U.S. 
Chamber of Commerce simply suggests a multiyear renewal.
    African Coalition for Trade (ACT), a nonprofit organization made up 
of private sector actors engaged in trade under AGOA, advocates for a 
15-year renewal period to encourage large investments, which take 10-15 
years to amortize. A long renewal period would not preclude 
negotiations of Free Trade Agreements (FTAs), similar to the Caribbean 
Basin Initiative (CBI) a permanent preference program that led to a 
number of reciprocal agreements.
    A longer 15-year renewal of AGOA, we believe is necessary to 
attract investment and trade, create jobs and ownership opportunities 
for SMEs in Africa.
Issue: Program Coverage
    Program coverage in terms of both countries and products continues 
to be an AGOA reauthorization issue. AGOA grants preferential market 
access to the United States for over 6,000 products (building upon the 
base of GSP), but certain products such as sensitive agricultural 
products subject to tariff-rate quotas remain excluded. As a result, 
the trade and development community has long advocated for 100 percent 
duty-free quota-free (DFQF) treatment for all products from sub-Saharan 
Africa.
    For instance:

   The African Union advocates for 100 percent QF treatment for 
        all products, including agricultural products.
   A 2014 Brookings Institution study found that extending 100 
        percent DFQF treatment to AGOA beneficiaries would generate 
        $105 million for African producers at a loss of only $9.6 
        million of U.S. producers. This benefit is derived almost 
        entirely from the increased preferential treatment for the 1 
        percent of goods considered politically sensitive in the United 
        States, and African exporters gained no significant advantage 
        when DFQF was calculated at 99 percent.\6\
   The National Foreign Trade Council (NFTC) has proposed 
        amending AGOA to include Regional Economic Communities (RECs) 
        as eligible for AGOA benefits.
Issue: Country Eligibility
    The debate around country eligibility is a significant area of 
focus, with two main issues emerging: whether to add additional 
eligibility criteria and how to improve the annual eligibility review 
process. The AGOA eligibility criteria and reviews act as both a carrot 
and a stick. The eligibility requirements create incentives for 
beneficiary countries to strive for higher standards, but they can also 
penalize countries that miss the mark by withholding or withdrawing 
benefits. Currently, AGOA eligible countries must have established or 
make continual progress toward establishing a market-based economy, the 
rule of law, elimination of barriers to U.S. trade and investment, 
poverty reduction policies, antibribery rules, and protection of 
workers' rights. Also, countries must not engage in activities that 
undermine U.S. national security, violate human rights, or support 
terrorist activities. These eligibility criteria are in addition to the 
political and economic criteria in the now-expired GSP, which AGOA 
eligible countries must also continue to meet. Adding to eligibility 
criteria or strengthening enforcement of eligibility criteria could 
actually deter investment because it could create greater uncertainty 
over whether benefits would remain in place.
    In advance of AGOA's reauthorization to improve the annual 
eligibility review process we should clarify the eligibility criteria 
around the following issues:

   Food Security;
   Additional Labor Standards; and
   Business Environment.

    For instance, a discussion continues around whether to continue 
eligibility for South Africa under AGOA, due both to South Africa's 
relatively advanced economy and political issues. Removing South Africa 
from the program, I believe, could disrupt critical regional market 
development. Further, taking preferential benefits away from more 
advanced economies does not ensure that less developed economies will 
benefit. Instead, market share tends to drift to other more advanced 
economies, like China, when preferences are removed.
    The Obama administration through the USTR has encouraged Congress 
to reexamine and update the eligibility criteria, for example by 
``[elimination of] unwarranted SPS barriers and employment 
discrimination.'' \7\ It also supports a more flexible eligibility 
review process, by, for example, adding intermediate steps before 
complete withdrawal is announced, such as partial withdrawal of 
benefits we believe is fairer and support.
    AFL-CIO and Solidarity Center have suggested that an AGOA renewal 
include continued improvement toward all core labor rights in ILO 
Conventions, and adding intermediate steps before revocation of 
eligibility to support workers and prevent retaliation against them.
Issue: Diversification of Exports Under AGOA
    Growth in exports is a central goal of AGOA and key to sustained 
economic growth and development, yet many sub-Saharan African countries 
have struggled to diversify their export base even with AGOA's 
benefits. A concentrated export base can be vulnerable to market 
disruptions on both the supply and demand sides, which makes countries 
more susceptible to economic and political volatility. A diverse export 
base, on the other hand, spreads commercial risk across many products 
and industries, which can help countries' better absorb market 
disruptions and maintain economic growth.
    Despite AGOA's broad product coverage, petroleum is by far the most 
heavily exported AGOA product, comprising 82 percent of total imports 
under AGOA in 2013.\8\ AGOA has already facilitated exports in 
nontraditional products, but petroleum exports continue to dominate 
AGOA trade, hovering at between 80 to 90 percent of total AGOA exports. 
Continued support for export diversification under AGOA would better 
distribute the benefits of AGOA and support sustained economic growth.
            Technical assistance and capacity development
    The USAID Trade Hubs (now renamed Trade and Investment Centers) 
have helped some AGOA beneficiary countries develop National Investment 
and Export Strategies, designed to help boost exports under AGOA. The 
strategies identify potentially competitive products and industries and 
market gaps that could prevent growth at scale. For example, Mauritius 
has identified light manufacturing of cutlery and hardware as 
potentially competitive, but assistance is needed with branding. In 
Mozambique, there is great competitive potential for agriculture 
products, including cashews and coconut, but this potential is hampered 
by poor infrastructure and requires technical assistance to comply with 
foreign SPS requirements.
    Capacity-building initiatives can also support diversification of 
exports under AGOA, especially those targeted at regional integration 
and supply chain development. For example, trainings on design and 
marketing would help improve the competitiveness of the textile and 
apparel industry, and sanitary and phytosanitary (SPS) training would 
help farmers access larger regional and international markets. In the 
textile and apparel sector, support for vertical integration is key to 
strengthen the development of the apparel industry and would also help 
support the development of related sectors like cotton.
    We suggest the United States formally assist AGOA countries with 
their national investment and export strategies and need policies to 
support them.
    We need a more comprehensive AGOA trade and investment strategy 
that will link trade and investment opportunities, build value chains, 
and strengthen participation in African regional markets--a ``Support 
Programme Imports (EIAO),'' to support export diversification for sub-
Saharan African countries and encourage U.S. businesses to increase 
imports from Africa \9\ in part through capacity-building that will 
support, grow, and diversify AGOA markets.
Issue: Enhancing Agricultural Trade
    A strong area of focus for AGOA's renewal is agriculture. 
Agricultural exports under AGOA have been sluggish, despite the 
agriculture sector's importance to sub-Saharan Africa. Enhancing market 
access for agricultural products and addressing supply and demand side 
constraints could help boost agricultural exports and greatly 
contribute to the region's economic growth.
    Despite challenges around agricultural trade, exports of 
agricultural products under AGOA have increased 8 percent. Those 
benefits are ``widespread; nearly two-thirds of AGOA beneficiaries 
experienced significant positive increases in their agricultural 
exports as a result of AGOA.'' \10\ AGOA has positively impacted the 
agriculture sector in sub-Saharan Africa, however, significant untapped 
potential for growth remains.
    Agriculture employs over half of the population, roughly 65 
percent, and approximately half of those employed in the sector are 
women. Agriculture growth is two to four times more effective at 
directly reducing poverty than growth originating in other sub-Saharan 
Africa sectors, and ``for every 10 percent increase in farm yields, 
there has been a 7-percent reduction in poverty in Africa.'' \11\


                  TABLE 2: AFRICAN AGRICULTURAL EXPORTS
                 (Value and share by destination, 2012)
------------------------------------------------------------------------
           Destination             Value (billion $)    Share (percent)
------------------------------------------------------------------------
World...........................                 57               100.0
Europe..........................                 20                35.4
Africa..........................                 13                23.5
Asia............................                 12                21.7
Middle East.....................                  5                 8.1
North America (United States)...               3(2)           5.4 (3.5)
South and Central America.......                  2                 2.7
------------------------------------------------------------------------
Source: Center for Global Development \12\


    The Obama administration has recognized the need to reexamine the 
agricultural tariff lines excluded from AGOA and determine whether any 
additional products could be added due to possible shifts in political 
sensitivity.\13\ We fully support this review.
    Tariff Rate Quota (TRQ) Administration: Despite the importance of 
the agriculture sector, many products like meat, dairy, sugar, tobacco, 
cotton, and value-added products containing dairy and sugar (e.g., 
chocolate) are subject to tariff rate quotas (TRQs) that predate AGOA, 
which limit their trade to U.S. markets. Although these products are 
politically sensitive in the United States, they hold great export 
potential for Africa.
    The WTO G20 group of developing countries has pushed for changes to 
the TRQ rules during the Doha Round of trade negotiations. At the 2013 
Bali Ministerial, part of the Doha Round, WTO Members reached a 
compromise agreement that stipulates that if tariff rate quotas for 
agricultural products remained underfilled, then the importing country 
will either accept goods at the lower tariff rate on a first-come, 
first-served basis until the quota limit is reached or issue an 
automatic import license upon request until the quota is filled. The 
compromise will be in place for 6 years unless WTO Members agree to 
renew or modify it. After the 6-year period, countries can opt out of 
the compromise agreement, which the United States has said it would do.
    Assistance Meeting SPS Standards: We know firsthand that simply 
eliminating tariffs is insufficient to boost agricultural exports under 
AGOA. Addressing nontariff challenges will also be critical, some of 
which are the focus of capacity-building initiatives linked to AGOA. A 
particular challenge for agribusiness, particularly SMEs, has been 
compliance with complicated U.S. sanitary and phytosanitary (SPS) 
requirements.
    The United States Government should move forward and could provide 
additional support to AGOA countries for SPS, for example assisting 
those seeking import approval for horticultural products from the U.S. 
Animal and Plant Health Inspection Service (APHIS) be implemented as 
recommended in a 2010 report published by the International Food and 
Agricultural Trade Policy Council (IPC).
    It is also important to note that many countries lack the capacity 
to implement their own SPS standards, which, on paper, are aligned 
largely with international norms. Increased U.S. support to help 
implement SPS standards would also help AGOA countries take better 
advantage of export opportunities.
Issue: Simplified Rules of Origin
    Rules of origin (ROO) are used to determine where a product 
originates, which is an important factor in determining whether a 
product is eligible to receive benefits under a preference program like 
AGOA. While rules of origin will help ensure that trade preferences are 
not bestowed on nonbeneficiary countries, complicated rules of origin 
can place undue burdens on companies and customs officials alike and 
may ultimately discourage use of preference programs. Simplifying and 
unifying rules of origin for preference programs could lead to higher 
usage rates by more AGOA beneficiary countries. For example, the more 
flexible third country fabric provision (mentioned above) has 
facilitated growth in the apparel sector. Also, allowing cumulation 
from other African countries will help to support regional integration 
efforts.
    In addition to the rules of origin under AGOA itself, rules of 
origin across preference programs are an issue. Many developing and 
least developed countries are eligible to receive preferential 
treatment under programs from a number of countries, all with different 
rules of origin, which can quickly become trade restrictive for 
developing countries that lack capacity to navigate these complex and 
conflicting sets of rules. Most AGOA beneficiary countries are also 
eligible to receive preferential treatment from the European Union 
(Everything but Arms), Canada (Least Developed Country Tariff Program), 
Japan (GSP), and Australia (Australian System of Tariff Preference), 
among others.
    During the Hong Kong Ministerial Conference in 2005, WTO Members 
acknowledged the difficulty that developing countries have in 
navigating diverse rules of origin under multiple preference programs. 
In a step toward harmonizing rules of origin, WTO Members agreed upon 
draft guidelines on rules of origin for preference programs for least 
developed countries during the 2013 Bali Ministerial Conference. The 
draft guidelines encourage rules of origin to be simple and 
transparent. Since then, the WTO has created a Database on Preferential 
Trade Agreements that contains information on the various rules of 
origin for preference programs of WTO Members.

   We propose simplifying AGOA rules of origin by:

        Conforming to the WTO draft guidelines on rules of origin 
            for preference programs;
        Extending uniform rules of origin to all African countries 
            to support regional harmonization;
        Review the apparel industry uniform rules of origin and 
            the third country fabric provision;
        Reducing the value-add requirement to a percentage that is 
            more in line with Africa's economy; e.g., ``10-15 [percent] 
            African content;'' \14\
Issue: Increasing Investment
    AGOA as a trade preference program aimed at increasing African 
exports to the United States, its goals also include increasing 
investment on the subcontinent. Due to the central nature the program 
has played in discussions on U.S. trade and investment policy, along 
with growing interest from the U.S. business community, AGOA does have 
the potential to link more closely to investment promotion. In addition 
to the business community, African institutions and development 
programs, such as the USAID Trade Hubs (now renamed the Trade and 
Investment Centers) have encouraged increasing investments by African 
governments using AGOA as one tool alongside other U.S. programs and 
policies.
    Trade and investment are highly interconnected. The increase in 
trade between sub-Saharan Africa and the United States has been 
accompanied by increased foreign direct investment (FDI) in sub-Saharan 
Africa. At the time when AGOA was enacted, U.S. companies were leaving 
sub-Saharan Africa at an alarming rate. The trend has, however, 
radically reversed with U.S. FDI to SSA countries having increased by 
over 50 percent between 2001 and 2007. Unfortunately the United States 
has been slow to invest in Africa, while other countries, including 
Brazil, India, and China, have raced to participate in Africa's growing 
economy.
    Sub-Saharan Africa's economies grew by an average of 5 percent in 
2013, and growth is projected to increase going forward. Foreign 
investment is expected to be approximately $80 billion in 2014. 
President Obama last year announced a commitment of $33 billion 
investment in Africa by the U.S. Government, the private sector, and 
the World Bank. The President's Power Africa initiative also received 
funding of $12 billion in August 2014 and will be an important 
counterpart program to AGOA, as energy is one of the major supply-side 
constraints facing increased trade. A renewed AGOA has the potential to 
encourage more American firms to invest in a diverse range of sectors 
throughout sub-Saharan Africa and help to keep the United States 
competitive in the region.
    An approach advocated by the AGOA Ambassadors Working Group among 
others, is an AGOA targeted tax incentives for U.S. companies that 
invest in nonextractive, priority sectors in AGOA beneficiary 
countries. These incentives could come in the form of tax credits or 
grant a zero tax rate on repatriated income or ``development 
exception.'' \15\ It would also help decrease the level of commercial 
risk and facilitate more U.S. private sector investment in nonpetroleum 
products in the region, which is already forecasted to increase by 
approximately 20 percent.\16\
    For instance, during the U.S.-Africa Leaders summit last year the 
United States announced a number of new trade and investment pledges 
for Africa. These new commitments include $300 million annually to 
expand the Power Africa initiative, $7 billion to the Doing Business 
Africa initiative, and additional funding for the New Alliance for Food 
Security and Nutrition. In addition, large commitments were made by the 
private sector and civil society at concurrent side events during the 
summit. These investments support increased exports under AGOA by 
enhancing infrastructure development, linking U.S. and African private 
sectors, reducing trade barriers in Africa, and supporting agricultural 
production in AGOA beneficiary countries.
    The AGOA Ambassadors Working Group recommends creating a diaspora 
fund to share knowledge about doing business in U.S. markets and 
provide capital using financing facilities to incentivize diaspora 
investment compatible with AGOA's mandate should be explored.
Issue: Targeted Trade Capacity-Building
    Preferential market access under AGOA has long been linked to trade 
capacity-building through initiatives like the USAID Trade and 
Investment Centers and other programs. A long-standing question is how 
trade capacity-building could be better linked to AGOA so that it could 
more sufficiently address both supply and demand side constraints that 
prevent businesses, particularly SMEs and women entrepreneurs, from 
taking advantage of the program and reaping its benefits.\17\ A 
particular focus has also been placed on how capacity-building could 
better support regional integration. I believe there is widespread 
support throughout sub-Saharan Africa, across industries and sectors 
regarding the importance of capacity-building to sustainable 
development.
    John Kufuor, former President of Ghana from 2000 to 2008, applauded 
AGOA as a ``stimulus'' for African manufacturers and as ``a welcome 
challenge'' for African companies, which must meet its rigorous 
criteria for accessing the U.S. market.'' \18\ However, he also noted 
that African entrepreneurs lack experience competing in the global 
economy and therefore need extra assistance and training to overcome 
knowledge and skills gaps.\19\ Africa's high trade barriers prevent 
trade and investment from taking root and thwart regional integration 
efforts that would better connect Africa to the global economy.
    The USAID Trade Capacity Building database estimates the United 
States provided over $3.3 billion in trade capacity-building assistance 
to sub-Saharan Africa between 2001 and 2009. In 2012, the United States 
spent approximately $94.6 million in trade capacity-building assistance 
in AGOA countries.\20\ However, current capacity-building initiatives 
need to be better coordinated to increase effectiveness. Better 
coordination and linkage with AGOA would help facilitate the program's 
objectives and leverage dollar expenditures.
    Capacity-building efforts could focus on reducing regional trade 
barriers and building capacity for higher value activities, 
particularly in areas that show promise and fall under AGOA like 
agriculture, textiles and apparel, and the leather industry. A possible 
agriculture investment example could leverage activities under the New 
Alliance for Food Security and Nutrition (which is also linked to the 
African Union's Comprehensive Africa Agriculture Development Programme 
(CAADP)) could be linked to AGOA eligible agricultural products in 
beneficiary countries and amplify the benefits generated under both 
programs. The Obama administration has also suggested improving the 
link between AGOA and infrastructure investment initiatives like the 
U.S.-Africa Clean Energy Finance and USAID funded development projects 
at the ports of Mombasa and Dar es Salaam and along the Northern and 
Central Corridors.\21\
    In theory, the United States Agency for International Development 
(USAID) is the coordinator of trade capacity-building, but a 2014 GAO 
study found challenges with its structure. For example, the official 
agency strategy predates the creation of the Millennium Challenge 
Corporation (MCC), which means MCC's critical trade capacity-building 
activities are unaccounted for in USAID's coordination plan.\22\ One 
widely supported proposal is the establishment of a more formal 
coordination process between the more than 12 implementing agencies of 
U.S. capacity-building assistance.
    I would be remiss if I did not include in my testimony the 
importance of infrastructure to promote sociodevelopment and poverty 
reduction in Africa. Intentionally implicit in AGOA's mission is 
support for an infrastructure development strategic framework in 
support of regional and continental infrastructure development in 
energy, transport, water, health, ICT and power and electricity. 
Without a sustainable infrastructure base in Africa AGOA's true 
development impact will not be fully achieved.
    According to the World Bank, just 16 percent of sub-Saharan African 
roads were paved in 2011, compared with 26 percent in Latin America, 65 
percent in East Asia and 79 percent in OECD countries. Only 1 in 3 
Africans had access to electricity, against 9 in 10 people elsewhere in 
the developing world. Poor infrastructure is a major impediment to even 
faster economic development; the continent loses 2 percentage points of 
GDP growth annually as a result of its infrastructure deficit.
    The American business community continues to fight for initiatives 
such as the African Growth Opportunity Act (AGOA) because they believe 
more must be done to help our private sector compete in African 
markets. While others forge ahead the United States may be falling 
behind. Companies operate with long planning horizons and sourcing 
decisions made many months or even decades in advance.
    AGOA's pending expiration provides an opportunity to review U.S.-
Africa economic relations and broaden the relationship to include a 
focus on supporting the critical infrastructure needed to achieve the 
impactful outcomes envisioned in AGOA. Investment in infrastructure 
needs to be more than doubled to about $93 billion a year within a 
decade and AGOA can be a catalyst to help spur U.S. investment 
opportunities in this sector.
Issue: Expanding Regional Trade and Integrating Africa Into Global 
        Supply Chains
    We believe there is broad consensus on the need to support deeper 
regional integration. Regional market development holds particular 
promise for African economic development and increased investment 
alike. Regional trade can produce economies of scale, and AGOA could 
better link to and support regional harmonization efforts already 
underway, including the Trade Africa initiative. Although AGOA is a 
trade preference program that opens the U.S. market and not a bilateral 
trade agreement, greater focus on regional markets could strengthen the 
program's reach.
    Building stronger regional markets will also encourage value chain 
development within sub-Saharan Africa and between African countries and 
global supply chains. This is critical because, as the U.N. 
stresses,``[i]n developing countries . . . value added trade 
contributes some 28 [percent] to countries' GDP on average . . . [and 
furthermore,] [e]conomies with the fastest growing [global value chain] 
participation have GDP per capita growth rates some 2 percentage points 
above the average.'' \23\
    Trade Facilitation is also a topic of focus and, notably, efforts 
to improve trade facilitation will both encourage regional market 
development and integrate Africa into global supply chains. At the Bali 
Ministerial Conference in 2013, WTO Members reached consensus on the 
Agreement on Trade Facilitation which includes a number of measures 
designed to enhance transparency, accelerate customs clearance times, 
and simplify customs formalities and procedures, all of which are 
expected to increase sub-Saharan Africa imports by about 55 percent and 
increase exports by 63 percent. Measures addressing supply side trade 
constraints allow businesses to be more competitive by reducing the 
amount of time it takes them to get their goods into the hands of end 
consumers. Facilitating trade at the borders increases predictability 
of delivery times and costs. Trade facilitation activities will have 
positive spillover effects. For example, previous trade facilitation 
activities in Burundi to streamline tax collection increased government 
revenues, which in turn fund health and education projects.
    Improved trade facilitation will improve AGOA usage rates by making 
it easier for more businesses to engage in cross-border trade through 
faster clearance times, increased transparency, and lower overall trade 
costs. Targeted, coordinated trade facilitation will play an important 
role and could improve hard and soft infrastructure and trade 
logistics, create enabling environments that increase market access for 
SMEs, local businesses and regional integration.
    Additional trade facilitation measures linking AGOA to service 
sector investments will be critical to value chain development. A 
diverse range of services are needed to make value chains develop and 
function, including transport, storage, and distribution services, 
along with financial, legal, and advisory services, and others. The 
payoff of improving services can be quite significant. Agricultural 
exports, for example, are highly responsive to quality of transport 
services and trade-related infrastructure. The potential for growth in 
services is significant, and AGOA should reap this benefit.
    The Corporate Council on Africa and East African Business Council 
developed joint recommendations on trade facilitation that were 
presented at the August 2014 U.S.-Africa Leaders summit in the context 
of the U.S.-East African Community Trade and Investment Partnership and 
Commercial Dialogue, led by USTR and the Department of Commerce, 
respectively. Through The Corporate Council on Africa's Trade Working 
Group in partnership with USTR and Commerce are involved in actions 
that could be implemented to strengthen the agricultural and apparel 
value chains, improve digital trade, build the cold chain, and improve 
customs procedures and technology, including electronic payment 
systems. The U.S. Chamber of Commerce is leading a global effort on 
trade facilitation that is complementary of these efforts related to 
sub-Saharan Africa.
Issue: Sustained High-Level Political Dialogue
    Although AGOA is an economic program, continued support for 
building the trade and investment relationship between the United 
States and African nations requires high-level political commitment. We 
recommend enhanced political dialogue that demonstrates a mutual 
dedication to strengthen and multiply commercial linkages would help 
strengthen the relationship between the United States and Africa and 
improve confidence among investors and businesses.
    Events like the historic U.S.-Africa Leaders summit which brought 
together President Obama and more than 40 heads of state from sub-
Saharan Africa to discuss ways in which to increase trade and 
investment, enhance security, and strengthen democracy must be 
continued. Notably, China and the European Union, both of which have 
aggressive commercial policies on Africa, hold regular summits with 
African heads of state. For example, through the forum on China-Africa 
Cooperation, Chinese and African Ministers meet annually, and a heads 
of state summit is held every 3 years.
    Key outcomes from the 2014 U.S.-Africa Leaders summit and 
additional ways in which AGOA could help foster political dialogue 
between the United States and sub-Saharan Africa include:

   Among the specific commitments achieved were: (i) increase 
        investment in the New Alliance for Food Security and Nutrition, 
        (ii) escalate Power Africa efforts through the Programme for 
        Infrastructure Development in Africa (PIDA) framework and by 
        providing $300 million per year to achieve 30,000 MW power, 
        (iii) expand U.S. trade and investment platforms, (iv) renew 
        AGOA, and (v) provide $7 billion in financing over the next 2 
        years under the Doing Business in Africa Campaign.\24\
   A recommendation from The AGOA Ambassadors Working Group 
        supports more frequent congressional delegation visits to AGOA 
        countries to enable legislators to witness the effects of AGOA 
        and better understand the region's commercial opportunities and 
        challenges, and help to inform future legislative decisions.

    We recommend a summit-level meeting held every 2 years would build 
on the success of the 2014 summit and continue to enhance political 
dialogue among the heads of state of AGOA beneficiary countries and the 
United States. These summits would provide a regular opportunity to 
discuss common interests, and could also enhance the utility of the 
annual AGOA forums.
    Mr. Chairman and members of the subcommittee, thank you for 
providing me with the opportunity to speak before you today. I hope you 
will move forward and resolutely to pass AGOA's reauthorization.

----------------
Notes

    \1\ AGOA Ambassadors Working Group Recommendations for the 
Reauthorization of the African Growth and Opportunity Act (AGOA).
    \2\ Froman, Michael. Growing the Development Dividend: U.S. Trade 
Policy and Global Development in the 21st Century. Office of the United 
States Trade Representative, 29 Jul. 2014. Web. 8 Dec. 2014.
    \3\ Schneidman, Witney & Lewis, Zenia A. The African Growth and 
Opportunity Act: Looking Back, Looking Forward. Brookings Institution, 
June 2012. Web. 9 Dec. 2014.
    \4\ Froman, Michael. Growing the Development Dividend: U.S. Trade 
Policy and Global Development in the 21st Century. Office of the United 
States Trade Representative, 29 Jul. 2014. Web. 8 Dec. 2014.
    \5\ U.S. and African Companies Call for Immediate Renewal of AGOA. 
American Footwear and Apparel Association, 13 Aug. 2014. Web. 10 Dec 
2014.
    \6\ The African Growth and Opportunity Act: An Empirical Analysis 
of the Possibilities Post-2015. Brookings Institution, 2014. Web. 12 
Dec. 2014.
    \7\ Testimony of United States Trade Representative Michael Froman 
Before the Senate Finance Committee on the African Growth and 
Opportunity Act (AGOA). Office of the United States Trade 
Representative, 30 Jul 2014. Web. 13 Dec. 2014.
    \8\ Loucif, S.J. U.S. Trade with sub-Saharan Africa, January-
December 2013. International Trade Administration, n.d. Web. 9 Dec 
2014.
    \9\ AGOA: Trade and Investment Performance Overview. United States 
International Trade Commission, 24 Apr 2014. Web. 11 Dec. 2014.
    \10\ AGOA: Trade and Investment Performance Overview. United States 
International Trade Commission, 24 Apr 2014. Web. 11 Dec. 2014.
    \11\ Carletto, Calogero, Jolliffe, Dean, and Banerjee, Raka. The 
Emperor has no Data! Agricultural Statistics in sub-Saharan Africa. 
2013. Web. 15 Nov. 2014.
    \12\ Elliott, Kimberly. AGOA's Final Frontier: Removing US Farm 
Trade Barriers. Center for Global Development, 28 Jul. 2014. Web. 12 
Dec. 2014.
    \13\ Fact Sheet: Investing in African Trade for our Common Future. 
The White House, 4 Aug. 2014. Web. 11 Dec. 2014.
    \14\ How AGOA 2.0 Could Be Different: Outlining Africa's Position 
on the AGOA Review process. African Union and United Nations Economic 
Commission for Africa, Apr. 2014. Web. 12 Dec. 2014.
    \15\ AGOA Ambassadors Working Group Recommendations for the 
Reauthorization of the African Growth and Opportunity Act (AGOA).
    \16\ Schneidman, Witney & Lewis, Zenia A. The African Growth and 
Opportunity Act: Looking Back, Looking Forward. Brookings Institution, 
June 2012. Web. 9 Dec. 2014.
    \17\ Note, the House Committee on Foreign Affairs and Senate 
Committee on Foreign Relations have jurisdiction over legislation 
concerning capacity-building for Africa.
    \18\ Schneidman, Witney & Lewis, Zenia A. The African Growth and 
Opportunity Act: Looking Back, Looking Forward. Brookings Institution, 
June 2012. Web. 9 Dec. 2014.
    \19\ Interview with John A. Kufuor, former President of Ghana 
(2001-9), Washington, April 17, 2012. Cited from Witney Schneidman, 
African Perspectives on AGOA. The African Growth and Opportunity Act: 
Looking Back, Looking Forward, (2012): 23. Brookings Institution. 
Africa Growth Initiative, June 2012. Web. 9 Dec. 2014.
    \20\ Williams, Brock R. African Growth and Opportunity Act (AGOA): 
Background and Reauthorization. Congressional Research Service, 24 Jul. 
2014. Web. 9 Dec. 2014.
    \21\ Fact Sheet: Investing in African Trade for our Common Future. 
The White House, 4 Aug. 2014. Web. 11 Dec. 2014.
    \22\ USAID Should Update its Trade Capacity Building Strategy. 
United States Government Accountability Office, Aug. 2014. Web. 14 Dec. 
2014.
    \23\ Global Value Chains and Development: Investment and Value 
Added Trade in the Global Economy. United Nations, 2013. Web. 10 Dec 
2014.
    \24\ Statement by the Chair of the U.S.-Africa Leaders Summit. The 
White House, 6 Aug. 2014. Web. 14 Dec. 2014.

    Senator Flake. Thank you, Mr. Williams. Ms. Feingold?

  STATEMENT OF CATHERINE FEINGOLD, DIRECTOR OF INTERNATIONAL 
                AFFAIRS, AFL-CIO, WASHINGTON, DC

    Ms. Feingold. Thank you. Good morning. Chairman Flake, 
Ranking Member Markey, and members of the Senate Foreign 
Relations Subcommittee on Africa and Global Health Policy, 
thank you for this opportunity. The AFL-CIO strongly supports 
reauthorization of AGOA. We support AGOA's objective of 
building sustainable economic growth in Africa.
    However, we are concerned that to date oil and gas 
constitute 80 to 90 percent of all exports under AGOA with only 
a few countries effectively using the program for nonenergy 
products. This has meant that many of the ambitious goals 
identified by AGOA have not been fully met.
    In the proposed reauthorization bill, we welcome some 
important changes, especially those that make the eligibility 
processes more transparent and accountable, including a formal 
process for third party petitions, public hearings, a biennial 
report on country compliance that includes civil society 
submissions, and the out of cycle reviews. We believe that 
these changes will create a more effective mechanism for unions 
and civil society organizations to raise concerns regarding 
compliance with AGOA eligibility criteria and hold their 
governments accountable.
    Despite these improvements, the bill unfortunately omits 
several important measures regarding eligibility that the AFL-
CIO believes would make AGOA more effective. These include: 
first, updating the labor criteria to include the abolition of 
the worst forms of child labor and guaranteeing freedom from 
discrimination, which would be consistent with the core 
conventions of the International Labor Organization. AGOA 
beneficiaries should also commit to making progress toward 
creating decent work, including good wages, respect for worker 
rights, and access to social protections.
    Second, requiring governments to develop and implement 
resource transparency standards. Too often commodity-driven 
growth supports corrupt regimes with little direct benefit to 
citizens. Transparency provisions would empower citizens with 
information needed to engage with governments and target 
corruption.
    Third, ensuring countries uphold their fundamental 
responsibility to protect against and remedy violations of 
human rights in the context of business activities as defined 
in the U.N. Guiding Principles on Business and Human Rights.
    Fourth, introducing a democracy clause. Lastly, in addition 
to strengthening the eligibility criteria, we strongly support 
increasing funding for capacity-building. This would include 
education and skills training for formal and informal workers, 
women and young workers, as well as for entrepreneurs, trade 
union and civil society organizations.
    Let me give you an example of why exactly we need a strong, 
effective AGOA and increased capacity-building programs. In 
June 2014, the U.S. Government took the rare step of suspending 
trade benefits for Swaziland, citing that government's 
systematic violations of fundamental worker rights, including 
repression of union and human rights leaders, the issuing of 
death threats, and imprisonment of activists, and the refusal 
to legally recognize the union federation TOCOSWA.
    This case underscores the need for rights-based training 
programs to help workers monitor and push back against many of 
the problems that occur in light industrial production in the 
region. Without that training, the workers of Swaziland would 
not be able to continue to advocate for improved working 
conditions in their country.
    With the reauthorization of AGOA, success will rely not 
only on improved trade flows, but also on the creation of 
coherent policy toward Africa that links AGOA to other programs 
that promote meaningful investment in Africa's workers as well 
as in its manufacturing and infrastructure capacity.
    One of the underlying assumptions behind the original AGOA 
legislation was that low skill exports would lead to the 
creation and growth of complex and higher skill sectors. 
However, trade preferences alone have proved insufficient to 
achieve that goal. Currently, trade and investment capacity 
building hubs in the region focus mostly on transport and power 
infrastructure issues to the detriment of worker rights, 
protections, and benefits.
    Through these trade hubs, we believe that programs need to 
be created to support initiatives that provide youth, women, 
and migrant workers in both formal and informal employment with 
education and skills training. Investment in strong labor 
protections as part of the trade capacity programs would make 
those hubs a foundation for creating decent work, a strong 
skilled workforce, and strengthen the system.
    Let me close by thanking you again for the opportunity to 
present the views of the AFL-CIO on AGOA reauthorization and 
implementation. I would be happy to answer any questions. Thank 
you.
    [The prepared statement of Ms. Feingold follows:]

                Prepared Statement of Catherine Feingold

    Chairman Flake and members of the Senate Foreign Relations 
Committee, thank you for the opportunity to present testimony on the 
Africa Growth and Opportunity Act (AGOA) and the role of the 
legislation in creating jobs and decent work in sub-Saharan Africa. We 
appreciate the committee's effort to encourage dialogue and move AGOA 
toward reauthorization. The AFL-CIO supports a 10-year AGOA 
reauthorization. While we have concerns about whether AGOA has 
succeeded in promoting shared economic growth, we believe a revised 
AGOA could contribute to job creation and development in Africa.
    Much of my testimony today is drawn from a previous policy brief 
published by the AFL-CIO and the Solidarity Center titled, ``Building a 
Strategy for Workers' Rights and Inclusive Growth--A New Vision for the 
Africa Growth and Opportunity Act (AGOA).'' \1\ That brief was based on 
intensive consultations with the AFL-CIO's African trade union partners 
and the regional organization that represents their interests.
    Many Africa trade unions are barely aware of AGOA because it has 
had very limited impact on the development of their economies, except 
in the extractive and textile and garment sectors, and only in a few 
countries. This is largely due to the historical, and unfortunate, fact 
that trade capacity-building has long focused on transport and power 
infrastructure, to the detriment of worker rights, protections or 
benefits.
    The AGOA legislation does, however, establish worker rights 
criteria. The AFL-CIO supports this recognition of the fundamental role 
these rights play in ensuring a sustainable, inclusive trade and 
development strategy, and strongly urges the inclusion of African 
workers, as stakeholders, in efforts to strengthen the impact and more 
equitably spread the benefits of AGOA. This means the development of 
well-grounded country strategies, and the trade and investment capacity 
building hubs that support them, that arise via a fully consultative 
process that embraces all stakeholders, including workers, their 
representatives and other civil society actors. These trade and 
investment capacity-building hubs could be greatly enhanced by 
addressing worker rights issues throughout their programs.
    Economic growth and expanding consumer markets in Africa are 
positive signs, especially for U.S. companies and manufacturers doing 
business in Africa. But they mask persistent income inequality: almost 
half of sub-Saharan Africans live in poverty. Key tests for AGOA will 
be how well it addresses growing income inequality in Africa and how 
well it promotes the creation of good paying and sustainable employment 
on the continent. The program should aspire not to push African 
countries into the global race to the bottom--in terms of wages, 
respect for rights and implementation of the law, a contest so many 
other countries have joined--but to fully embrace its stated goals or 
reducing poverty and strengthening democracy, along with increasing 
trade and integration.
    A new AGOA must take into account what lies behind poverty, 
including the changing face of the workforce. A high percentage of 
Africans toil in the informal economy, with subcontracting and 
irregular labor contracts put downward pressure on wages and working 
conditions. Women workers dominate in many informal sectors and 
predominate in AGOA-promoted industries such as floriculture and 
garments. And many workers migrate for jobs, where they may be 
vulnerable to exploitation or left uncovered by labor laws.
    The AFL-CIO's support for AGOA is based on feedback received from 
engagement with partner trade unions in Africa, through bilateral 
discussions and the work of the Solidarity Center, an AFL-CIO-allied 
organization with programs in 13 countries in sub-Saharan Africa. 
During the recent U.S.-Africa Leaders summit, the AFL-CIO hosted a 
delegation of 38 union leaders and worker rights advocates from sub-
Saharan Africa. Speaking at the summit's Civil Society Forum and in 
other venues, those leaders argued not just for the reauthorization of 
AGOA, but also for a better AGOA. A joint partnership statement between 
the AFL-CIO and the International Trade Union Confederation's Africa 
Regional Office articulated the key points of a shared economic vision 
for Africa.\2\ This vision focuses on inclusive economic growth, with 
workers benefiting from job creation and access to financial stability, 
education, health care, and social protection. Key parts of this vision 
include investing in young workers, gender equality, migrant rights and 
policies on trade, investment, and industrialization that generate job 
growth but with strong respect for worker rights and the rule of law.
    AGOA is very much a part of this vision but requires changes that 
better integrate trade promotion into the legislation's broader goals 
of promoting democratic governance and respect for human rights, 
including worker rights. In the original act, it was clear that the law 
was created not only to support increased trade and investment but also 
to encourage rule of law development, address corruption, eradicate 
poverty, and support civil society organizations. The AFL-CIO 
enthusiastically embraces that vision and is pleased that it remains a 
goal in the new authorization.
                   i. improving eligibility criteria
    AGOA's eligibility criteria contain a range of U.S. policy goals 
including the establishment of a market economy, the rule of law, 
political pluralism, the elimination of barriers to U.S. trade and 
investment, economic policies to reduce poverty, efforts to combat 
corruption, increased access to education and health care, and the 
protection of internationally recognized worker rights.
    In the current law, section 104 (F) explicitly enumerates 
``internationally recognized worker rights'' as: ``protection of 
internationally recognized worker rights, including the right of 
association, the right to organize and bargain collectively, a 
prohibition on the use of any form of forced or compulsory labor, a 
minimum age for the employment of children, and acceptable conditions 
of work with respect to minimum wages, hours of work, and occupational 
safety and health.''
    AGOA's labor rights language needs to be consistent with the 
highest standards embodied in other trade legislation and state that 
countries must meet all core rights laid out in the corresponding ILO 
Conventions, which are reflected in the ILO Declaration of Fundamental 
Principles and Rights at Work. There also should be an explicit 
reference to elimination of the worst forms of child labor and freedom 
from discrimination, including the rights to equal remuneration and 
freedom from discrimination in employment and occupation enshrined in 
ILO Conventions 100 and 111. It should be clarified that the right to 
acceptable conditions of work with respect to minimum wages includes, 
among other things, any legally or contractually required pay (such as 
overtime, bonus, and holiday pay) and any legally or contractually 
required contributions to pensions, health care, disability insurance 
or other benefits.
    The particular focus on equal remuneration and freedom from 
discrimination in employment and occupation is particularly critical 
given the changing role of women in the African workforce. Extending 
trade preferences to a country can increase employment and better 
connections to markets for women, but it also has the potential to 
increase existing inequalities and/or worsen economic opportunities.
    Light industry, particularly the garment and textile sector, is 
heavily staffed by women--and often young women. The Solidarity Center 
has noted in exchanges with union partners that, in its programs in 
Kenya, Uganda, Malawi, Lesotho, and Swaziland, women garment and 
textile workers have struggled with major workplace problems including 
low wages, sexual harassment, discrimination, unsafe workplace 
conditions and a lack of nonwage benefits, such as paid maternity 
leave. Where unions were formed to represent workers in these 
countries, we saw improvements in their working conditions and wages 
that generated gains for their families and communities.
    Additional improvements to eligibility criteria should also 
include: requirements for countries to make continual improvement 
regarding labor protections over time, elevating standards and living 
conditions in tandem with economic growth; provisions for protecting 
human right in the context of business; explicit mention of democracy 
as a benchmark and a standard for resource transparency and activities. 
This last point is critical as commodity-driven growth too often 
supports corrupt regimes and results in little direct benefit to the 
majority of citizens. AGOA should contain measures that require 
countries to develop and implement transparency standards, and AGOA 
benefits should be limited, suspended or withdrawn for beneficiaries 
that fail to develop or implement such standards.
     ii. creating more robust mechanisms for eligibility oversight
    The AFL-CIO is pleased that the process of sanctioning countries 
that do not comply with AGOA's eligibility criteria has been changed in 
the draft legislation, as we see removal from the program as a last 
step. We also believe that the new petitioning process empowers 
stakeholders and can send strong signals to governments to change their 
behavior. The AFL-CIO also welcomes the proposed flexibility of 
applying a selective loss of benefits. Ultimately, however, the U.S. 
Government must be prepared to withdraw eligibility as it did with 
Swaziland when governments simply refuse to comply with the act's 
requirements.
                         iii. capacity-building
    As part of an overall effort to strengthen AGOA, trade capacity-
building, including in the areas of worker rights and the environment, 
is fundamental and requires financial resources as well as a commitment 
to ensuring that gains from trade result in inclusive economic growth.
    Capacity-building is crucial to sparking better use of AGOA and 
broader economic development, but must be accompanied by a robust 
development strategy. Current capacity-building efforts, such as the 
Trade Africa and Power Africa initiatives, focus primarily on 
bolstering transport and power infrastructure. While these are 
necessary to meet emerging development needs and close gaps that keep 
African countries from taking advantage of AGOA benefits, the United 
States must also invest in building stronger democratic institutions, 
enhancing social protections and developing needed human and resource 
capital if AGOA is to live up to its ambitious goals. Trade capacity-
building must address the ability of stakeholders to hold their 
governments accountable to the standards included in the AGOA 
eligibility criteria. Strong citizen engagement will support 
sustainability of projects and investments.
    Congress should explicitly authorize funding for initiatives that 
provide youth, women, and migrant workers--in formal and informal 
employment--with education and skills training; support informal 
economy unions and worker-driven organizations; and strengthen these 
organizations' ability to participate in democratic decisionmaking and 
demand legal rights and access to social protections, particularly in 
the areas where violations of labor and environmental rights are 
prevalent.
    Attention to core labor standards enumerated in the AGOA section 
104 should be part of a larger development strategy focused on 
workforce development, skills building, and health and safety 
awareness. As agencies such as USAID promote intraregional trade as 
congruent to the goals of AGOA, a deliberate effort should be made to 
bring unions and worker rights organizations into the process.
    Unions are best prepared for, and already responding to, 
intraregional trends and issues. In East Africa, where the East African 
Community (EAC) is integrating economies (supported by programs like 
Trade Africa), the East Africa Trade Union Confederation (EATUC) is 
working to promote harmonized labor standards and social security 
portability across the economic zone. The Congress of South African 
Trade Unions (COSATU) has recently released a statement noting that the 
impact of U.S. poultry exports could severely impact jobs in South 
Africa.\3\ COSATU argues, however, that this debate is not germane to 
renewal of trade preferences under AGOA, and should be argued in a 
different venue, such as the World Trade Organization.
    Finally, the Swaziland example again shows the need for rights-
based training programs to help workers monitor and push back against 
many of the noted problems that plague light industrial production 
worldwide. In sectors such as garments and textiles, these programs are 
necessary as well as work to help workers share in the gains from 
trade.
Conclusion
    A better AGOA has the potential to change not only the nature of 
Africa's contributions to the U.S. economy, but also to transform the 
lives of African workers whose work contributes to the wealth and trade 
that arises from duty-free access to the United States. The AFL-CIO 
supports the draft legislation, though it would like to see some 
strengthening in the eligibility criteria including labor rights 
provisions as well as monitoring and accountability mechanisms. The 
AFL-CIO believes that Congress needs to authorize capacity-building 
funding in separate legislation so as to allow gains from trade to be 
broadly shared.

----------------
Notes

    \1\ Building a Strategy for Workers' Rights and Inclusive Growth--A 
New Vision for the Africa Growth and Opportunity Act (AGOA). AFL-CIO 
and Solidarity Center, July 2014.
    \2\ Statement of Partnership at the Conclusion of the U.S.-Africa 
Leaders' Summit, AFL-CIO/Africa Regional Organization of the 
International Trade Union Confederation (ITUC-Africa), August 8, 2014.
    \3\ COSATU, Press Statement, AGOA should remain nonconditional and 
preference based, April 22, 2015.

    Senator Flake. Thank you, Ms. Feingold, and thank you all. 
I will start with some questions, and when Senator Isakson gets 
back, we will have him report on the markup last night.
    But, Mr. Eisner, first you mentioned that China is eating 
our lunch here, and I believe, Mr. Hart, you mentioned that we 
have improved or we have increased imports, or, I am sorry, 
trade by 3 percent. China has done 13 percent during that same 
time. What can we do--I mean, what is the one thing that China 
is doing that we are not, the most important thing, put it that 
way. I know that other countries--you mentioned European 
countries are signing bilateral investment agreements right and 
left. And after the question about what China is doing that we 
are not, I would like to go into whether this is forestalling 
or making it easier or harder for bilateral trade agreements to 
be signed.
    So, Mr. Eisner.
    Mr. Eisner. Thanks for the question. You know, I think the 
one thing that China is able to do that the U.S. Government is 
not just in the position or the U.S. business community is this 
kind of command and control approach when it comes to 
investments in Africa that we have seen over a long period of 
time where they offer lower rates. They offer a different 
incentive package for African governments. They come in with a 
different set of standards we will say when engaging both on 
worker issues, but also their investment strategies.
    So I think the fact that they are--where the United States 
can come into play is much more in the alignment of our foreign 
assistance packages that may be taken into account of 
remodeling some of the systems we have out there, whether it is 
the USAID system or MCC, or other U.S. Government agencies that 
can look at the lifeline approach of projects and take into 
account what the American business community is able to offer 
to some of these countries to make it a little bit more 
competitive to compete with China, Europe, and others.
    I think a lot of times it is not taken into account that 
what Americans are putting into that system is a very long 
approach to investment. It is not a take-and-grab approach, and 
I think that is one of the defining factors that we should 
start looking at when we look at aiding. Obviously we need 
reauthorization of Ex-Im and other agencies to help support 
that investment abroad.
    But I think it is just generally the approach of 
competitiveness versus what China's approach is, which is much 
more hands on, I would say, from the top tier of government 
down.
    Senator Flake. Mr. Hart, do you have any thoughts here?
    Mr. Hart. If I could--before I answer your direct question, 
much has been written in the last couple of days about 
bipartisanship blooming all over Washington. And I just would 
like to say I think your committee has reached new heights with 
the AFL and the Chamber heartily endorsing reauthorization. So 
it is really fantastic to be part of the Hallelujah Chorus 
here. [Laughter.]
    I think Scott has answered better than I can. Let me just 
say China is taking investment in Africa seriously. They look 
at Africa as a key trading partner, and the United States so 
far is not. We are pivoting East, but the East is pivoting to 
Africa. I think we need to take much more seriously the 
potential growth and the potential economic opportunity.
    I think we continue to look at Africa, first of all, as one 
country. It is not. And we also look at it with a 20-year-old 
predisposition that it is all corrupt and we cannot do business 
there, and that is also untrue. The barriers to doing business 
are there. I have discussed a number of them, energy being a 
key one. But I think we can take much more--take a much more 
vigorous approach to our economic relationship with the 
continent.
    Senator Flake. Mr. McRaith, you mentioned that you would 
prefer to do some vertical integration there. Can that be done 
in a 10-year timeframe? I know a 15-year is preferable, but can 
it be done with 10 years?
    Mr. McRaith. Yes. So actually I like the comments of Mr. 
Williams. Certainly 15 years was something that we initially 
came forward with. Again, I would just reconfirm that we are 
pleased to get 10 years, but 15 years would have absolutely 
been the preferred. A number of people that we met with 
actually asked us to verify and submit facts as to what is it 
you really need--why do you need 15 years. Why do you need 10 
years? Why does the three-year renewal not work?
    So we actually submitted a set of documents, historically, 
that showed the investment and the ROI on major investments, 
you know, $400 million investments in spinning, weaving, dying, 
and full mill capacity in the ROI. And that really--that ROI 
really kind of balanced out around the 8th and the 9th years. 
So the 10-year really just kind of meets the absolute minimum 
threshold required to get us that investment into place. The 
belief is that by then FTAs will be in place and we will 
continue forward. But 10 years was the absolute minimum, but 
people we were really looking for was that 15-year mark to go 
with those big investments. It can be done, but barely.
    Senator Flake. All right. Well, thank you. Mr. Eisner, what 
incentives are there for any of the African countries to enter 
into a bilateral agreement with us while they are getting 
preferential treatment here? We do have examples. I think 
Colombia is one. There is a preferential agreement there. They 
entered into a bilateral free trade agreement with us, or an 
FTA at least, and suspended the preferences they were getting. 
What are some examples in Africa that--where that might happen? 
Is South Africa the best candidate for that, and do you foresee 
that during the next 10 years if we do reauthorize it and us 
entering into bilateral agreements with any of these countries?
    Mr. Eisner. Colombia is a great example of how we were able 
to transition from what was a one-way trading system to a peer 
trading system, I might say. I think, you know, there are 
opportunities here. I think that the renewal of AGOA helps that 
platform, but we really have to reenergize and relook at the 
way we do trade agreement across the continent I think.
    The diversity of the markets, let us not forget, is pretty 
high. So the South Africa example, while they have pretty high 
GDP also have a population that is about 40 percent employment 
all told, both accounted for and unaccounted for, which 
obviously I believe AGOA's mission there is to help raise that 
40 percent up into the stratosphere.
    But you look at what we are doing on the regional 
investment treaty front or the regional FTA front, and I think 
that is where we will see greater successes. And when we point 
to the EAC and the great work done by USTR and the Commerce 
Department to truly try to align the EAC into a system that can 
be compatible with U.S. trade FTA styles.
    I think there are examples of how we get there. I do not 
have an answer for you today of what it is going to look like. 
I think we need to rethink how we are doing trade with the 
continent and what does the approach look like when you have to 
take into account that you have a Kenya in the same regional 
trading block as a Burundi. They are not on scale, and so how 
do you adapt to a new style of trade with the continent. And I 
am looking forward to working with folks across this table to 
come to that conclusion the day after you guys reauthorize 
AGOA.
    Senator Flake. Thank you. Senator Markey has kindly agreed 
to let Senator Isakson go first since he has a time constraint.
    Senator Isakson. And I appreciate the Senator from 
Massachusetts for doing so. I want to--as you all know, last 
night in the Finance Committee we marked up the Extension and 
Authorization of AGOA for a 10-year extension, which I was very 
proud to be a part of. I think Africa is the continent of the 
21st century for the United States of America.
    The Chinese are extracting a lot of wealth. They are 
building a lot of buildings, but they are using their own labor 
to do so. America is saving lives with PEPFAR. Millennium 
Challenge is building infrastructure and capacity. And if we 
continue to bolster our trade and jobs with Africa, we are 
going to do a great job expanding our relationship, and it will 
be the principal continent of this century for America in terms 
of trade, profitability, and partnership. So I am excited to 
work on it, and I am excited for AGOA to be moving forward.
    I want to make one public statement, though, and I hope the 
South Africans are listening all the way across the globe. I 
just talked to our Ambassador, by the way, in South Africa. We 
have had some market access problems with the South Africans. 
They are the single largest beneficiary of AGOA. They are a 
very developed country in comparison to most of the other 
African countries. They have market--we have market access 
problems for agricultural products from United States of 
America, and Senator Coons and I have worked extensively to try 
and get the South African Federation on Poultry and others to 
come to the table and negotiate forthrightly.
    I offered two amendments last night, one which I withdrew 
and one which passed unanimously. The one that passed 
unanimously was an instruction to the President to immediately 
after the passage of AGOA to instigate an investigation and 
inquiry into South Africa's practices as far as agricultural 
access to their market, which I intend to do. And with the new 
parameters, as was mentioned by Ms. Feingold, in the bill, we 
have the ability to take action against a country that is not 
participating or playing fairly with the rules, which we intend 
to do.
    The amendment that I withdrew was one that would terminate 
South Africa at the end of 3 years' period in terms of 
participation in AGOA. I withdrew that because that is a 
sledgehammer. I do not like to use sledgehammers, but I also do 
not think the South Africans should take the withdrawal of that 
amendment as any easing of our pressure to see to it we have 
fair and equitable access to the markets in South Africa.
    Trade is a two-way street. The South Africans are 
benefiting richly from it. We need to make sure that AGOA works 
not only for the South Africans, but for the United States of 
America as well. So I just want to make that point, and I think 
Senator Coons might want to, if you would let me refer to him 
just a second, may echo my statement.
    Chris.
    Senator Coons. Thank you, Senator Isakson. With the 
concurrence of the Chair, I just wanted to add that Senator 
Isakson has been a tireless leader on the issue of AGOA 
renewal. He and I have visited South Africa. We raised this 
issue of open market access years ago. In fact, Scott, I think 
we were together at the U.S.-South Africa Chamber launch that 
same trip, and we have had a number of, I think, focused, and 
relevant, and valuable conversations.
    The breadth of concern in the Senate about ensuring that 
South Africa is a good and fair trade partner is a reflection 
of the bipartisanship Mr. Hart referenced. And Senator 
Isakson's amendment that was adopted last night had more than a 
dozen cosponsors, and the one that was narrowly withdrawn and 
will be reconsidered also enjoys broad support.
    It is my real hope that we can resolve this in a positive 
way, but it is difficult for me to go home and say that I am 
giving duty-free, quota-free access to the markets of the 
United States when there is not a comparable fair attitude on 
the part of the most developed economy on the market, one that 
we hope to work together to strengthen and to broaden. So I 
just want to commend you for your leadership and your continued 
and strong engagement on this.
    Senator Isakson. And I thank Chairman Flake for giving us 
time, and Senator Coons for his work and cooperation, and 
Senator Markey for his patience. Thank you. [Laughter.]
    Senator Flake. Thank you.
    Senator Markey.
    Senator Markey. I thank you, and I thank you, Senator 
Isakson and Senator Coons, for your incredible interest in this 
issue. It is very impressive. Ms. Feingold, can you talk about 
the state of child labor in Africa? And could you comment on 
what the United States could do more to ensure that we deal 
with that problem?
    Ms. Feingold. Absolutely. Thank you so much for your 
question. I think that this has been an issue that we have 
focused on a lot, and with the leadership of Senator Harkin and 
Engel, we have one model of a protocol that has been used 
within the cocoa supply chain. But it is an issue throughout 
sub-Saharan Africa, and I think the first step to dealing with 
child labor is working with the business community, and we do 
have lots of multistakeholders initiatives where we work 
together to identify where child labor is in the supply chains, 
and then work to get technical assistance there to make sure 
that children are not working in hazardous situations, and that 
we link it to access to education, and make sure that their 
parents have good wages that keep the kids out of the----
    Senator Markey. So can we talk about that a little more 
specifically then? So our goal is to keep them in school, not 
have them at work. And there are eligibility requirements in 
AGOA for the ability to be able to get a job and not be still 
in school. Can you talk about that a little bit and how the 
United States can help to make sure that it is not exploited?
    Ms. Feingold. Absolutely. Well, we think that there is a 
direct link between making sure that their parents actually 
have decent work so that when we talk about AGOA we talk about 
building strong jobs in the region, that means their parents 
have good wages and that their kids are not seen as being 
needed to work to have income for the family. And so, we 
strongly support that children first get a good education so 
that that contributes to the development of Africa, and that 
their parents have their fundamental worker rights, the ability 
to bargain with their employer to raise wages, and have good 
jobs, and keep their kids out of the workplace.
    Senator Markey. All right, thank you. Mr. Williams, you 
referenced Power Africa in your testimony. We heard from the 
President of Liberia that they have a grand total of 42 
megawatts for a country of 4.2 million people. Just to contrast 
that, Massachusetts has about 6 million people and we probably 
have about 16 thousand megawatts. So 42 megawatts for an entire 
country of 4 million people, and Power Africa can play a role 
there.
    So could you help us to understand what it is that you see 
that Congress can do, America can do, to help expand that 
access to electricity, especially renewable electricity? Solar 
could be a big game changer in Africa.
    Mr. Williams. Well, Senator, I had the privilege last year 
of coordinating the African Energy Ministerial in Ethiopia, and 
one of the featured agencies was the USAID's Power Africa and 
the Power Africa Program. And it was very successful because, 
as has been mentioned by the other witnesses here, Africa has 
$600 million people without electricity. And I can say to you 
right now in southern Africa there are blackouts and rolling 
blackouts in even South Africa.
    So power and energy are critical. If AGOA is going to be 
successful, it is something we need to address. Power Africa 
brings an opportunity to the U.S. Congress because Power Africa 
has created a working task force of all the Federal agencies 
who get together monthly and talk about a coordinated approach 
and strategy to producing more power and electricity in Africa.
    Two weeks ago I was in St. Thomas and I attended a DOE 
meeting there just prior to the President's trip to Jamaica as 
he was on his way to Panama. In St. Thomas, we talked about 
renewables and the importance of renewables. Renewables are 
going to be a big factor, but it is still going to be really 
petroleum and gas for a while as we transition, but we need to 
promote renewables as one of the options.
    We are also looking at doing a very big regional power 
ministerial to follow up the African Energy Ministerial 
possibly in Angola this year with all of the Africa Energy 
Ministers from the SADC region and talk about how they can work 
together--reach an agreement on how they can work together to 
produce more electricity and power for the region. So it is a 
regional strategy.
    Senator Markey. Okay, beautiful. Mr. Hart, in 2013, the 
United States imported $26 billion worth of petroleum products 
under AGOA. But just on average, 240,000 barrels of oil are 
spilled in Nigeria per year, and that is despoiling drinking 
water, agricultural lands. So what is and can AGOA do to ensure 
that there are better environmental standards that do protect 
the long-term natural resources of each of these countries?
    Mr. Hart. That is a great question, Senator, and I want to 
admit quickly that I am not an expert in the particulars of how 
AGOA can be strengthened in this way. I do think that our 
ongoing engagement with Nigeria in this regard is really 
important, and why I testified that I hope that we will be able 
to move and strengthen AGOA quickly, as well as move beyond 
AGOA so that we can have an even more robust engagement and 
ensure that there are the kind of safety standards that are 
needed to protect the environment and to ensure the safety of 
the citizens of the countries from whom this oil is being 
extracted.
    Senator Markey. Okay. Mr. Williams, do you have a view on 
that, how we can ensure that or help to apply pressure so that 
better environmental standards are used while the oil, which is 
being extracted to be sent to America, despoils the environment 
in some of these countries.
    Mr. Williams. Well, let me say that, really a two-way 
street like trade is a two-way street, environmental practices, 
best practice, is a two-way street. I am of the opinion that a 
lot of the things that we need to have implemented need to be 
put into formal agreements and understandings. So there are 
ways that we can mitigate some of the environmental risk, but 
we need to look at best practices, which gets back to capacity 
development. We need to send and we need to train people to do 
better.
    Now, one of the things that is happening is gas is going to 
be a transitional fuel, but Africa is sitting on oil and gas. 
They are going to be developing those resources, so let us not 
have them reinvent the wheel. Let us go there and bring best 
practices and develop models that can be emulated. So, I mean, 
no one wants to be a polluter.
    Senator Markey. Thank you all so much for all of your work 
in this area. Thank you, Mr. Chairman.
    Senator Flake. Thank you, Senator Markey.
    Senator Coons.?
    Senator Coons. Thank you, Chairman Flake and Ranking Member 
Markey. Thank you for convening this and for this terrific 
panel that represents the whole range of NGOs, and the private 
sector, and advocacy organizations, and those who represent 
from labor to the Chamber. It is, as Mr. Hart said, a great 
opportunity for us to continue to build on what I think is some 
steadily growing bipartisanship here in the Senate.
    AGOA, as we all know, offers the opportunity for much of 
sub-Saharan Africa duty-free and quota-free access to the U.S. 
market. And through AGOA, we seek to increase trade and 
investment in the region, promote sustainable economic growth, 
and encourage the rule of law and market-oriented reforms. I 
support the long-term reauthorization of AGOA, and I am pleased 
to see that the Finance Committee has made real progress on an 
at least 10-year authorization.
    But it is important that we also consider ways that greater 
two-way trade with the region, particularly with developed 
countries, establish reciprocal agreements with key markets 
such as South Africa. If Congress is able to pass a 10-year 
AGOA reauthorization, one concern I have is that a country like 
South Africa would have duty-free access to our markets until 
2025. And it is my hope that our Government will work toward a 
free trade agreement with South Africa before that.
    And so, I am wondering whether a shorter reauthorization 
for South Africa would make sense, and if we offered instead 3 
years of AGOA benefits which would give us time to negotiate an 
FTA that would provide benefits for U.S. companies eager to 
continue accessing the South African market. As we know, 
Senator Isakson has filed such an amendment. I expect that we 
will take it up, and reconsider it, debate it, and move it on 
the floor once the Finance bill comes out.
    What I would like to ask this panel to turn to is whether 
there are other things in the AGOA reauthorization that we 
should be taking up. Some outside experts from Brookings to the 
Center for Global Development have suggested that we should do 
more to increase intraregional trade, trade capacity-building, 
and investment. The Finance Committee bill makes a great start, 
but there are some things missing, in my view. For example, the 
Millennium Challenge Corporation, which I view as an innovative 
foreign assistance and development agency started under 
President Bush, does great work on a bilateral basis, but does 
not have the legal authority to do regional compacts.
    So I, yesterday, along with Senator Isakson, met with Dana 
Hyde, and when I was recently in Kenya I was talking with 
Aeolus Kenya, Limited about a regional infrastructure project, 
the conversation Senator Markey had just had with a number of 
you about power and Power Africa. If Liberia really is to take 
advantage of Power Africa, it will be on a regional basis. The 
Mount Coffee Dam would provide hydropower to a whole region. 
If, as Mr. William discussed, we are going to have a successful 
energy ministerial in Angola, much of that is going to be about 
regional development.
    So I think we should authorize the MCC to enter into 
regional compacts. I also think that we should be specifically 
adding some trade capacity building and trade facilitation 
provisions. So I would welcome any member of the panel who 
wants to comment for a moment on whether the MCC should have 
regional development authority, the ability to enter into 
regional compacts, and whether you think we could 
constructively add more capacity within AGOA to particularly 
advance the role and interests of women, to particularly 
advance trade capacity building and trade facilitation. I will 
take a comment from any panel member. If you would, Mr. Hart 
and Mr. Eisner.
    Mr. Hart. I am glad I get to go first because we all 
earlier vigorously agreed on all the points you just made. So 
we absolutely agree more and better trade facilitation 
assistance is necessary. It needs to be streamlined. There are 
21 agencies in the U.S. Government that do this, and they are 
doing great work, but it needs to be streamlined and 
strengthened. I think many of us agree that the MCC should be 
given the authority to do regional compacts. ONE heartily 
endorses that idea. Regional integration is critical. Their 
best trading partners are their neighbors.
    And lastly, as you mentioned and as I testified, we believe 
the passage of the Electrify Africa legislation is a critical 
complement to AGOA. Business leaders across Africa cite lack of 
electricity as a major, major constraint to production. High 
energy costs or no energy make African producers less 
productive and less competitive. So we heartily endorse the 
Electrify Africa Act and believe that is a terrific complement 
to AGOA.
    Senator Coons. Thank you, Tom.
    Mr. Eisner.
    Mr. Eisner. Yes, this love fest continues. So, you know, I 
echo the Electrify Africa Act or the Energize Africa Act or 
whatever it becomes in a combined bill. I think it is necessary 
for us as we look at the continent and the power generation. 
You will never get to industrialization on the continent, which 
all the countries really are striving for, unless you have a 
base load of power that is able to supply investment.
    On MCC, could not agree more than regional compacts are the 
way that we should be going. If the Government of the United 
States, whether it is USTR or the Commerce Department, are 
focusing on NEAC, you know, regional trade investment 
framework, whatever it might be called at the end of the day, 
then I think you have to do that with some support dollars 
behind it, and those dollars supplied by MCC make a lot of 
sense.
    I do think, as I mentioned earlier to Senator Flake, we 
need to look at the MCC model and how do we incentivize more 
American companies to invest in the process. I am open to think 
through with you all how that may be looked at. I think they do 
amazing work, and I think there are a lot of opportunities for 
greater opportunities for the U.S. inputs into that considering 
the lifeline of the projects. And how we invest in the 
communities, and what those companies are doing in those 
communities to build up the living wages of everyone around it 
I think need to be considered in the MCC process.
    On the 3-year--I tend to disagree that the 3 years makes 
sense in South Africa due to the destructive nature it could 
have on neighboring countries, like Lesotho where you have 
$275,000 a year that are put in a very low economy, and the 
fact that the textile industry there really is the backbone of 
the economy. And if you take South Africa out of that equation 
and you look at Namibia, you look at Botswana, all reliant in 
some way or another on the South African economy. And if you 
extract the U.S. portion of that, which is, I think, how it 
might be looked at, as a political angle into South Africa, I 
agree wholeheartedly that some of the market impediments that 
we are facing really need to be addressed and addressed 
yesterday, not today. But I think there is a way we need to get 
to there, and I am not sure 3 years in and out and the 
sledgehammer approach that Senator Isakson mentioned was the 
right way. I think the cautious approach that was adopted by 
Finance yesterday I think is a much more palatable one, and one 
that needs to be looked at for other economies where there are 
impediments to U.S. investments, like in the area of local 
content, forced localization where it really is becoming a real 
challenge for American companies who invest around parameters 
that just do not make a lot of sense for us.
    Senator Coons. I think if we look at how far the South 
African economy has come, there has to be a question whether at 
some point they need to graduate to an FTA, and at some point 
whether the terms under which they have been benefiting need to 
be modernized to reflect what would be a really balanced trade 
relationship. I think that was the point Senator Isakson was 
making and which I concur.
    Mr. Eisner. And I would fully agree with you that we have 
to evolve that relationship beyond where it is today, but 
considering the elements around that and the high unemployment 
in the market, I am not distorted that gets along the way. But 
I fully endorse what you are saying.
    Senator Coons. Mr. Chair, will you tolerate the other 
members of the panel answering this question, and then we are 
going to have to wrap up. Mr. McRaith, Mr. Williams, Ms. 
Feingold?
    Mr. Williams. Senator Coons, I echo maybe it slightly 
different than how Scott's interpretation is, but I think that 
we need clarity. Business people need clarity if they are going 
to invest not their money, their stockholders' money. And if 
they do not think it is going to beyond 3 years, and 3 years is 
not enough of a timeline to make a business decision. Ten 
years, okay, it is a compromise. We really need a longer time 
period.
    Getting to your other question, I support what MCC is 
doing, and I would suggest that we look at their metrics, how 
they evaluate what is successful and what is not successful, 
and see if we can apply that to some other programs that need 
to be better measured, and to look for better outcomes.
    I would like to comment briefly on the China comment that 
came up earlier. China is doing a lot in the continent, and we 
do need to play some catch up in some places. But I can tell 
you that the African Ambassadors and the Africans would prefer 
to work with U.S. companies, which gets to a suggestion I am 
going to make is that we need to empower our Ambassadors, our 
embassies, our commercial embassy officials, to be more 
supportive of U.S. businesses. I have personal experiences 
where they do not always see as part of the role as a diplomat. 
But we need to--if we do not have a lot of hubs in Africa, we 
need to try to see if we cannot create some one-stop-shops in 
these embassies, that can be more supportive of U.S. businesses 
as they run into these opportunities.
    Senator Coons. Mr. Williams, as you are well aware, a 
number of us in the last Congress fought for and ultimately 
successfully got an increase in the number of foreign 
commercial service officers on the continent. I just came back 
from a trip to Kenya, to Chad, to Senegal, and I could not 
agree more. When I meet with ambassadors and their commercial 
staff, whether State Department or FCS, they are increasingly 
getting the message that this is of great value to us 
politically, strategically, economically. And I hope to work 
tirelessly with the chairman on this issue as well.
    And I remain very interested, Mr. McRaith, Ms. Feingold, in 
how we advance the labor and economic development potential 
that the apparel industry really offers with longer term 
clarity and authorization, and how to make sure that the child 
labor issues that plagued the cocoa industry have really been 
resolved. I have had a number of very encouraging meetings 
about significant progress that has been made, but would love 
to continue that conversation with you.
    Thank you to the panel, and thank you for your engagement 
in this issue, and thank you for what you recognize on a broad 
basis is the significant potential for addressing the 
challenges of poverty and of underdevelopment, that real trade 
and real investment make possible. And I look forward to 
working with the chairman on moving AGOA forward. Thank you.
    Senator Flake. Thank you, Senator Coons, and thank you all. 
And before we close, one thing that we have not addressed, and, 
Mr. McRaith, you may want to talk about what you are doing to 
be a good corporate citizen in the countries in which you 
operate, your company and others, just to end on that.
    Mr. McRaith. Yes, it is interesting. You know, as we look 
at Africa and we see an incredible opportunity, but it is not 
just that we see an incredible opportunity in Africa. What we 
look at is that we have 30 years of learning of how not to do 
business around the world as we enter countries. And, you know, 
you can count any number of countries where the apparel 
industry, which is a first mover of large quantities of jobs, 
are not necessarily proud as you look back at what has 
happened.
    So as we enter Africa, the key for us is to learn from all 
of those things that we could have done differently and apply 
them. And, you know, the simplest way I would describe it to 
you is we have corporate values, and in some cases we have met 
with governments in Africa where they have not had the same 
values that we have had. And we have drawn bright lines in the 
sand and said we will not cross this line until you correct 
things that need to be corrected in some cases, which were 
actual laws and had been put into place.
    The good news is that those laws were changed. We forced 
those to be changed, and that is the value of private 
enterprise entering these countries. You can make those things 
change. When many Presidents or Prime Ministers of different 
countries had made phone calls to have those laws changed, it 
did not mean the same as someone who was now faced with an 
industrial revolution being told that their people would not be 
part of it because people could not come and engage with them.
    So the key is to make sure that the people who go in have 
the values, and we are actively working with the governments to 
say it is not only about ensuring that you have the right code, 
but that you actually have the enforcement capability to ensure 
the code is applied, and you have the right training ability to 
make sure that people understand that.
    And, again, just the one thing I always recognize about 
Africa, someone said it earlier, is we talk about a continent 
very often as most people talk about a country. And this is a 
continent inside of which you could fit all of the United 
States, all of India, all of China, all of Japan, and most of 
Europe physically would fit inside that continent. And so, you 
really have to think of it regionally, and you have to focus on 
those countries that you are engaging with.
    And, again, I can only tell you we have been pleased with 
the engagement we have had to deliver on those values, ensure 
the investments are made to secure them. But we go in with our 
eyes wide open and are always verifying that what is being said 
is, in fact, what is happening.
    Senator Flake. Well, again, thank you all for your 
testimony. For the interest of members and their staff, the 
record will be open until the close of business on Friday.
    And we look forward to incorporating many of the 
recommendations that you have made here today as we consider 
these policies and this legislation. So thank you again.
    With the thanks of the committee, the hearing is now 
adjourned.
    [Whereupon, the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


           Letter from Ethiopian Global Initiative submitted 
                      by Senator Edward J. Markey
                      
                      
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