[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
LOOKING BEYOND 2025 FOR
TRADE WITH SUB-SAHARAN AFRICA, HAITI,
AND OTHERS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TRADE
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JUNE 12, 2024
__________
Serial No. 118-TR05
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_______
U.S. GOVERNMENT PUBLISHING OFFICE
57-107 WASHINGTON : 2024
COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, JR., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
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SUBCOMMITTEE ON TRADE
ADRIAN SMITH, Nebraska, Chairman
VERN BUCHANAN, Florida EARL BLUMENAUER, Oregon
DARIN LaHOOD, Illinois DAN KILDEE, Michigan
JODEY ARRINGTON, Texas JIMMY PANETTA, California
RON ESTES, Kansas SUZAN DelBENE, Washington
CAROL MILLER, West Virginia DON BEYER, Virginia
LLOYD SMUCKER, Pennsylvania LINDA SANCHEZ, California
GREG MURPHY, North Carolina TERRI SEWELL, Alabama
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota
DAVID KUSTOFF, Tennessee
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Adrian Smith, Nebraska, Chairman............................ 1
Hon. Earl Blumenauer, Oregon, Ranking Member..................... 3
Advisory of June 12, 2024 announcing the hearing................. V
WITNESSES
Skip Richmond, Founder and Co-CEO, DTRT Apparel Group............ 6
Daniel Runde, Senior Vice President and Schreyer Chair in Global
Analysis, Center for Strategic and International Studies....... 14
Af Nasser, Vice President of Sourcing & COE, Cintas Corporation.. 29
Marggie Peters Muhika, Deputy Regional Director of Africa,
Solidarity Center.............................................. 34
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record and Responses from Daniel Runde,
Senior Vice President and Schreyer Chair in Global Analysis,
Center for Strategic and International Studies................. 78
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 89
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LOOKING BEYOND 2025 FOR TRADE WITH SUB-SAHARAN AFRICA, HAITI, AND
OTHERS
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WEDNESDAY, JUNE 12, 2024
House of Representatives,
Subcommittee on Trade,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to call, at 1:15 p.m., in
Room 1100, Longworth House Office Building, Hon. Adrian Smith
[chairman of the subcommittee] presiding.
Chairman SMITH. The subcommittee will come to order. Thank
you, Ranking Member Blumenauer, subcommittee members, and
certainly our witnesses here today.
Today's hearing is an important opportunity to discuss the
set of trade preferences programs scheduled to expire in 2025,
including the African Growth and Opportunity Act, AGOA, and
U.S. Trade Preference Programs for Haiti and the Nepal Trade
Preference Program.
These programs are designed to foster economic growth in
some of the least developed countries and economies in the
world while strengthening U.S. leadership and influence abroad.
This is especially important as countries like China and
Russia seek to spread their malign influence globally.
In April, this committee took an important first step by
passing the Generalized System of Preferences Reform Act, GSP,
which would provide the most significant reform of the GSP
Program since it began.
Last month I introduced legislation with the support of 20
committee Republicans to reauthorize the Miscellaneous Tariff
Bill Process as well. Now we must build on this effort by
considering reform and renewal of our Trade Preference Programs
set to expire in 2025.
Since its inception in 2000, the AGOA Program has been the
cornerstone of U.S. trade and economic engagement with sub-
Saharan Africa. The program has two important elements--one,
duty-free access to the U.S. market, and two, eligibility
criteria to ensure beneficiary countries meet U.S. standards in
key areas like human rights, governance, rule of law, and fair
treatment for foreign companies and exporters.
These elements are designed to support sub-Saharan African
economies, develop trade capacity, and strengthen U.S.
relationships with beneficiary countries.
Today's hearing is a continuation of a deliberate Ways and
Means Committee process regarding AGOA renewal, which has
included roundtables, member visits to AGOA countries, and now
a public hearing.
I encourage all interested stakeholders to participate in
this hearing through submissions for the record.
A few key areas we should address through AGOA renewal
include: One, pursuing reciprocal market access for American
farmers, workers, and businesses in sub-Saharan Africa;
Two, addressing the process of graduation from AGOA when a
country surpasses the per capita income threshold;
And three, transforming AGOA to encourage more value-added
manufacturing on the African continent while ensuring third
countries are not receiving disproportionate benefits.
But first we must ensure that participation in AGOA
supports the development of science- and rules-based standards
in beneficiary countries and use the annual review process to
address any unfair treatment of U.S. ag products.
All AGOA countries must provide fair market access to U.S.
producers and manufacturers. In the case of countries that are
prepared for that next step, we must pursue robust
conversations to move such an agreement forward.
I once again call on the Biden administration to develop a
coherent, effective strategy for pursuing comprehensive trade
agreements and seeking congressional approval of such
agreements.
It is well past time--well past time--to resume
negotiations of a comprehensive, enforceable trade agreement
with Kenya, for example. My colleagues on both sides of the
aisle agree on this.
Kenya wants to step up and move on from a temporary
unilateral preference program to a reciprocal, mutually
beneficial relationship, and the only thing standing in the way
is this current administration.
When countries have reached the income level to graduate
from the program, I hope we can consider commonsense reforms to
ensure they are not punished for success in economic
development. Congress should consider creative solutions to
prevent a graduation cliff and secure market access for our
exporters.
In each of these areas, improving access to African markets
will support American workers, businesses, and farmers with
little downside since AGOA already provides generous access to
the U.S. market.
I am eager to hear more about how Congress can encourage
more value-added manufacturing on the African continent.
African cotton should not be sent halfway across the globe
to be made into fabric just to be sent back to Africa for final
manufacturing. The people of Africa should be the beneficiaries
of AGOA.
Next I will turn to our Haiti Trade Preference Programs.
They were created by Congress through the Haitian Hemispheric
Opportunity through Partnership Encouragement and the Haiti
Economic Lift Program Act.
These programs provide important benefits to imports of
textiles and apparel products from Haiti. The apparel industry
supports thousands of jobs for the Haitian people, providing
important economic stability in this time of uncertainty and
unrest.
I appreciate the leadership of Representative Wenstrup on
this and look forward to working with him regarding next steps
on the program.
Also, the Nepal Trade Preference Program, which was
established in 2015, to help Nepal recover from devastating
earthquakes is set to expire next year. I look forward to
working with my colleagues and stakeholders on next steps for
the program.
I now recognize the Ranking Member, Mr. Blumenauer, for his
opening statement.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
In the course of the hearing and the opening statements,
you will see there are a number of areas of agreement. The
African Growth and Opportunity Act, also known as AGOA, and the
Haitian Hemispheric Opportunity through Partnership and
Encouragement Act, known as HOPE, are the cornerstone of U.S.
trade policy with sub-Saharan Africa and Haiti.
The world, however, looks a lot different than it did when
we enacted these programs decades ago. We now have years of
experience to help understand what is working and what could be
improved to raise living standards and bring more trade and
investment both to Africa and the Caribbean.
This hearing is the next step in the committee's ongoing
review of American preference programs for sub-Saharan Africa
and Haiti, and there is clear, bipartisan consensus on
promoting trade and investment with Africa and the Caribbean.
Then Chairman Neal set a strong tone for reviewing and
improving these programs last Congress. This Congress, Chairman
Jason Smith and Trade Subcommittee chair, Mr. Adrian Smith,
have continued the committee's engagement, and this hearing
today is an example of that.
Their leadership is buttressed by several of my colleagues
who have demonstrated continued commitment to Africa and Haiti.
Chairman Smith mentioned some of his Republican colleagues.
I would be remiss in not acknowledging Ms. Sewell, Ms. Moore,
Mr. Evans, and Ms. Plaskett.
And by the way, we wish continued recovery for Mr. Evans
from his recent health problems.
House Democrats have collectively shown an impenetrable
commitment to the people of sub-Saharan Africa and Haiti and
will pursue the U.S. trade policies that advance prosperity for
the people of these regions.
I can speak confidently for House Democrats when I say we
are firmly committed to reauthorization of AGOA and HOPE before
their expiration next year.
But reauthorizing the programs without improving them is a
missed opportunity. The International Trade Commission's report
on these programs demonstrated the urgent need for reform.
It is important that our trade policies not only address
long-term standing concerns, such as the low utilization rates
in AGOA and labor violations in Haiti, which we have had some
direct experience with, but also reflect the realities of today
and pave the way for the future that we want to see.
AGOA is a success story. It has opened new opportunities
for economic engagement and has resulted in tens of thousands
of jobs in sub-Saharan Africa.
It is critical Congress drives more investment to the
continent, which creates opportunities for business both in
Africa and the United States, as well as for the larger
diaspora.
But as proud as we are of AGOA's achievements, it has not
achieved all that we had hoped. As we consider the future of
AGOA, we need to find creative ways to improve AGOA's
utilization rate, increase value-added exports to the United
States, and ensure that the benefits, in fact, flow to the
African beneficiary countries.
Africa has become a leader in addressing climate change. It
is the site of key critical minerals and is quickly becoming a
tech and innovation powerhouse.
The creative sector, including TV, film, and music, are
essential to the economies of the continent. Our American trade
policy must reflect these developments and make the most of
these opportunities.
Our trade policy should recognize that certain African
economies are more advanced and better integrated globally
since AGOA was enacted, making it important to both consider
AGOA graduation rules, and developing mutually beneficial and
reciprocal trade agreements with other sub-Saharan African
countries.
Like sub-Saharan Africa, the United States has a moral
obligation to remain committed to the Haitian people. That
obligation is now more important than ever.
Haiti played a central role in the American Revolutionary
War, as we are coming up to that 250th anniversary, where
hundreds of Haitians fought for American independence, a
feature that is little known in this country.
And years later, Haiti would defeat the French, become the
first Black republic, influencing the rise of abolitionist and
anti-colonial movements all over the world, including the
United States.
But the record of the United States dealing with that
revolution is shameful, and we are still paying the price--more
importantly, the Haitian people are paying the price today.
Many of Haiti's difficulties are because of a failure of
American policy. That is why our preference programs for Haiti
are so important. They provide an opportunity to help
strengthen Haiti's economy and our trading relationship and
remediate past wrongs.
But we must acknowledge known problems with implementation
of our preference programs, especially concerning labor rights
violations and noncompliance with Haiti's national labor laws.
The United States has selectively engaged in this space on
issues like forced labor in the sugar sector, but there is much
more to do.
Like any trading relationship, our relationship with Haiti
requires work on both sides--work to improve labor conditions,
political stability, and diversify Haiti's export to the United
States.
Mr. Chairman, I am convinced that today's hearing today is
a step in that direction in this important work, and I
appreciate you convening this and look forward to hearing from
our witnesses.
Chairman SMITH. Thank you, Mr. Blumenauer. I appreciate
your input there.
I now recognize the chairman of the full committee, Mr.
Smith, for his opening statement.
Chairman SMITH of Missouri. Thank you, Chairman Smith and
Ranking Member Blumenauer, for holding today's hearing.
As the committee continues to examine how best to
reauthorize the African Growth and Opportunity Act program, as
well as strengthen other trade relationships with other
nations, while we have time to address the reauthorization of
AGOA before its September 2025 expiration, there is no sense in
waiting. And so I appreciate the trade subcommittee keeping the
drumbeat going.
This hearing follows two bipartisan roundtables we held
earlier this year one with ambassadors from several of the
sub-Saharan Africa countries that participate in AGOA, and
another with stakeholders that utilize AGOA in order to hear
firsthand their perspectives on the program.
The AGOA program has a successful track record of
encouraging economic development in sub-Saharan Africa and
greater access for U.S. agriculture products in that region.
Something I have watched closely over the years, having
attended an AGOA forum in Gabon back in 2015, under the
program, American taxpayers have invested over $8 billion in
trade-related activities in Africa over the past 20-plus years.
Reauthorizing AGOA will ensure that American taxpayers get
a positive return on their investment. It will also strengthen
our economic relationship by making sure access to African
markets for American exports, especially agriculture, is fair,
and our trade relationships benefit American workers, farmers,
and businesses.
We also need to use our trade tools to counter the malign
influence of countries like China and Russia. The AGOA program
can play an important role in shoring up our critical supply
chains to reduce our dependence on China.
Earlier this year, the Ways and Means Committee approved
trade reforms to counter China's growing military and economic
influence around the world. This included the Generalized
System of Preference Reform Act, introduced by Trade
Subcommittee Chairman Smith, that would ban China from the GSP
program and incentivize countries to grow their economies in
partnership with the United States, not China.
Those same reforms should be reflected in a reauthorization
of AGOA.
Meanwhile, our trade relationship with Haiti supports
American manufacturing while encouraging stability in a nation
that is currently suffering tremendous political and social
turmoil.
I have serious concerns with the violence that is taking
place in Haiti, violence that recently took the lives of two
individuals from my home state of Missouri who were in the
country doing missionary work when they were killed by armed
gang members.
I want to thank Dr. Wenstrup in particular for his
leadership on this issue, as well as a number of other members
of this committee on both sides of the aisle.
I appreciate their recognition that U.S. businesses can be
a force for good, particularly for a nation like Haiti, which
is the poorest country in the Western Hemisphere.
Thank you again, Chairman Smith and Ranking Member
Blumenauer, and to all of our witnesses for being here today.
Chairman SMITH. Thank you.
I now have the pleasure of introducing our witnesses for
today's hearing. Skip Richmond is the founder and co-CEO of
DTRT Apparel Group.
Next we have Daniel Runde. He is the senior vice president
and Schreyer Chair in Global Analysis at the Center for
Strategic and International Studies.
And I will yield to Dr. Wenstrup to introduce our next
witness.
Mr. WENSTRUP. Thank you, Mr. Chairman, and I am pleased to
introduce Mr. Af Nasser, vice president of Sourcing Center of
Excellence and Supplier Diversity at Cintas Corporation, a
proud Ohio company, headquartered in the Cincinnati area. It
has been a pleasure to watch Cintas grow through my lifetime.
Cintas does great work across the United States every day,
ensuring that millions of employees can go to work and perform
their best by providing uniforms, supplies, first aid and
safety products two things very important to me as a
physician.
Cintas is uniquely positioned to provide a key perspective
in our discussion today, as their global supply chain runs
through both sub-Saharan Africa and Haiti.
As many of my colleagues here know, I have been a
supportive leader on Haiti trade issues over the last few
years, and I credit Cintas Corporation with bringing this
critical issue to my attention as early as 2019, when they
shared with me their support for renewing the Caribbean Basin
Trade Partnership Act.
Working with Representative Terri Sewell, we got that bill
done in 2020, and I am looking forward to doing the same with
the HOPE/HELP preferences that are up for renewal right now.
With that, Mr. Nasser, I want to welcome you and thank you
for being here today.
Chairman SMITH. Thank you, Dr. Wenstrup.
And we also have Marggie Peters Muhika. She is the deputy
regional director of Africa with the Solidarity Center.
Again, thank you to all of our witnesses. I do want to say
that your written statement will be made part of the record,
and you each will have five minutes to deliver your remarks.
Once that yellow light appears, if you wouldn't mind
bringing the flight in for a landing, do what you can to stick
within the five minutes.
So with that, Mr. Richmond, you are recognized.
STATEMENT OF SKIP RICHMOND, FOUNDER AND CO-CEO, DTRT APPAREL
GROUP
Mr. RICHMOND. Thank you. I would like to thank you for the
opportunity to share our story and engage in this important
conversation.
My name is Skip Richmond. I was born and raised in the
U.S., and I am the founder and co-CEO of DTRT Apparel Group,
the largest apparel manufacturing company in West Africa. DTRT
owns two factories in Ghana where we produce knitwear--
primarily T-shirts, polos, and hoodies--and other sportswear
for large clothing brands in the U.S. and EU.
We currently employ over 5,600 workers in Ghana, making
over 50,000 garments per day.
I would like to give you a brief background of how our
business got started and what we have accomplished so far. I
will also share with you some of the very exciting things we
see ahead for our industry, and the African continent in
general, that are dependent on a swift and timely, long-term
renewal of AGOA.
First, how we got started, my cofounder, Marc Hansult, and
I first met in 2004 when we both went to work for a Hong Kong-
based trading company.
In 2005, we needed to find a factory outside China to
produce some basketball uniforms. We learned about AGOA at that
time, and we traveled to Madagascar looking for a factory to
produce goods for us.
At the conclusion of that visit, the decision was made for
the company to establish our own factory in Madagascar.
Unfortunately, Madagascar experienced a coup a few years
later in 2009 and lost its access to AGOA benefits as a result.
That experience reinforced for us the importance of finding a
stable democratic home for our future work.
In 2013, Marc and I cofounded DTRT Apparel. DTRT stands for
``Do the right thing.'' With two young children of my own at
the time, I wanted to show my kids that it was possible to do
good in the world and still make a good living.
Although our industry has a bad reputation, justifiably in
many cases, I don't know of any industry that holds so much
power to do good in this world. What other industry can employ
so many people, so quickly, from a socioeconomic population
with such limited opportunity?
Marc and I have always felt that a garment-manufacturing
business can make a healthy profit, while treating our people
and the planet with respect. We set out to harness the power of
our industry to provide our local workers and their children a
better future and to hopefully set an example for others in our
industry.
We chose Ghana as DTRT's home for several reasons--first
its geography. From our experience in East Africa, we
encountered transit times of 50 to 60 days or longer to get
finished goods from the factory to the U.S.
That very long lead time limited the customers we could
service. To provide the shortest possible lead time to
customers and expand our market, we were specifically
interested in looking at a country in West Africa to minimize
that time.
Second, but just as important, Ghana is arguably the most
stable democracy on the continent, having achieved multiple
consecutive peaceful transitions of power over the past three
decades.
After our experience with the coup in Madagascar,
establishing operations in a stable democracy was very
important to us.
Another critically important factor in our decision to
operate in Ghana was the fact that it was possible for us to
pay wages high enough that the jobs we provide can truly lift
our local workers and their families out of poverty.
Contrary to many places around the world that trap workers
in poverty with their very low wages, we are having an enormous
positive impact on the lives of our local workers and their
families in Ghana.
This year, 2024, marks the 10-year anniversary of our first
garment exports from Ghana to the U.S. As mentioned earlier, we
currently employ over 5,600 people, 76 percent of whom are
women. Almost 50 percent of our supervisors and managers are
women, and that number is increasing every month.
There isn't a pool of experienced workers in Ghana like
exists in Asia. We train every new worker, and the training
cost is significant. It typically takes 6 months for a new
worker to become efficient enough for us to break even.
Without the benefits of AGOA, we wouldn't be able to afford
to train so many people.
Renewing AGOA now is critical to maintain the momentum we
are currently seeing. When we started our business 10 years
ago, it was very difficult to get the attention from major
brands to bring their business to West Africa.
But today there has never been more interest in sourcing
from African manufacturers. The COVID pandemic highlighted how
overdependent many companies remain on Chinese suppliers.
Human rights issues and other geopolitical forces are
forcing brands to seek alternatives to Asian suppliers like
never before. Unlike years ago when barely any brands had
Africa on their radar, today every major U.S. brand to whom we
speak is exploring ways to source from Africa.
Despite the many advantages that sourcing from AGOA-
eligible countries offer, African manufacturers can currently
only fulfill a small fraction of what these U.S. brands need.
Africa must clear two key hurdles to be competitive with
established global players in the long run--developing human
capacity through training of skilled garment workers and
building regional value chains to supply fabrics and
accessories.
That training is happened already at DTRT and others in the
region via on-the-job instruction from experienced ex-pats, but
we can only afford to train because of the benefits from AGOA.
The lack of existing input supply is where AGOA remains
most essential. While a Chinese manufacturer can buy all their
raw material inputs domestically, we must input nearly--or
import nearly 100 percent of raw materials from overseas.
Some of that investment is already happening, but
uncertainty over when and for how long AGOA will be renewed,
limits and delays needed investment. The ROI in investment in
our industry is at least 7 years.
Renewal of AGOA within this year for a minimum of 10 to 20
years, would provide the sort of comfort that companies require
before investing to maximize AGOA's impact.
We would also like to highlight the continued importance of
the Third Country Fabric Provision in any AGOA renewal. There
are hundreds of different fabrics that will ultimately need to
be produced in Africa for the continent to no longer be reliant
on imported textiles.
It will likely take decades for the necessary fabric mills
to reach a scale where the continent will be self-sufficient.
As such, the Third Country Fabric Provision would remain an
essential clause in AGOA for at least the full term of any
renewal.
We started DTRT in 2014, when we knew AGOA was up for
renewal just 1 year later, based on nothing more than faith
that Congress would do the right thing and extend this
important policy.
We borrowed money from our friends and families, and we
spent many years worrying about how we would make payroll at
the end of the month.
We expect to continue our rapid growth in the years to
come. We believe we have played a key role in establishing West
Africa as a viable manufacturing source for American apparel
companies at a moment when for the first time ever, the entire
industry is seeking alternatives to China.
Congress can send a strong message to ensure AGOA fulfills
its promise by renewing AGOA swiftly for another term.
As I tell my own team regularly, don't let perfect be the
enemy of good. Yes, AGOA can be improved, but delaying its
renewal risks doing more harm to the momentum we are seeing
than the potential good that added refinements might offer.
I implore you as a citizen, taxpayer, and entrepreneur, to
find a way to renew AGOA quickly, and if needed as-is, with the
ability to refine it in the future if necessary.
Please don't let the debate on improvements to AGOA be
endless, and please remember that each passing day without
renewal means delaying and possibly losing forever a
significant amount of business for the continent of Africa to
other parts of the world.
Thank you very much.
[The statement of Mr. Richmond follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH. Thank you, Mr. Richmond.
Mr. Runde, you are recognized.
STATEMENT OF DANIEL RUNDE, SENIOR VICE PRESIDENT AND SCHREYER
CHAIR IN GLOBAL ANALYSIS, CENTER FOR STRATEGIC AND
INTERNATIONAL STUDIES
Mr. RUNDE. Thank you. Chairman Smith, Ranking Member
Blumenauer, and members of the subcommittee, thank you.
There are three basic options for AGOA which include no
AGOA renewal, a copy-paste renewal of the 2015 legislation, or
three, enhancing AGOA with a series of modernizations.
I have two bottom lines. First, I am in favor of renewing
AGOA with some updates to the legislation. Second--and this is
very important--failure to renew AGOA would be a strategic
disaster for the United States.
Champagne corks will pop in Beijing over our failure to
renew AGOA. Our African partners will be enormously
disappointed with us, and failure to pass AGOA means that
American business will be disadvantaged in Africa.
AGOA is the unilateral trade agreement that provides duty-
free access to the U.S. market. You all are aware of that.
Like the rest of the world, Africa today is a different
place than the Africa of 2000. Africa is a freer place than in,
say, 1990. Africa's middle class has tripled to over 350
million people. There are more smartphones in Africa than in
the United States of America.
The creation of the African Continental Free Trade Area,
one of the largest free trade areas in the world, is a game-
changer. Linked with AGOA, AFCTA will encourage greater U.S.
commercial investment in the African region because U.S.
companies will be able to tap into suppliers across the
continent.
China's agreement with African countries has dramatically
increased in the past decade. Fifty-two of the 54 African
countries have signed on to Belt and Road. China has invested
at least 2.5 times as much in African infrastructure as the
entire Western world.
The Chinese have ownership of 23 ports--or control of 23
ports in Africa. China is consolidating global influence over
mining, including in Africa. Today, Huawei owns up to 70
percent of all 4G networks in sub-Saharan Africa.
U.S. trade with African states is one-fifth the size of
China-African trade.
AGOA is part of our offer to Africa to counter China. So I
have got several recommendations.
First, renew AGOA, please, and make some improvements.
There are some special considerations for the digital space
and for minerals. Although there are no barriers to African
digital trade exports to the United States, Congress has an
opportunity to recognize the growing importance of digital
trade.
Language can be included in AGOA's reauthorization to
develop a partnership, a digital partnership, with Africa that
builds on emerging international standards and reduces barriers
to digital trade in African countries.
Right now there are no countries in Africa currently making
electric vehicles or electric batteries, and there are no
tariffs on basic raw materials and minerals, so--however, now
would be the time for us to ramp up our partnership with
African countries through the Minerals Strategic Partnership.
Regardless of whether or not Congress determines if AGOA
eligibility is the equivalent of an FTA for the purposes of the
Inflation Reduction Act, the U.S. should launch a comprehensive
development and development finance initiative along the lines
of Power Africa for mining and minerals in Africa.
Number 3, fix graduation eligibility. Renewals should fix
graduation criteria so that countries that benefit from AGOA
are not punished for their success by being graduated out of
the program.
Becoming a middle-income country like Mauritius means that
these countries graduate from AGOA, and these countries lose
their AGOA benefits.
Four, we should create bilateral, free trade agreements on
the African continent. We should think about regional free
trade agreements along the lines of the CAFTA-DR agreement in
Latin America for West, East, and Southern Africa.
Fifth, we should adjust the timelines. Let's aim for at
least a 10-year or even a 16-year renewal.
Six, let's use foreign aid to support AGOA. In the next
Congress, I hope we will develop a major foreign assistance
initiative for mining and minerals.
I hope we will develop a major foreign assistance
initiative to close the digital divide.
And three, I hope we develop a major foreign assistance and
partnership initiative to create 20 to 30 private universities
in Africa as we did in India and Costa Rica in the 1960s.
Seven, the executive branch needs more than a binary on-off
switch for AGOA. I know that South Africa is on your minds. And
AGOA is a trade mechanism. It is not a political mechanism.
When the United States experiences tensions or
disagreements with certain African countries, it is tempting to
treat AGOA as a stick. South Africa has been a particularly
poor partner on a number of fronts, so I understand the
temptation.
We should instead employ a variety of political tools. The
Coons Rish draft legislation would provide a larger menu of
enforcement options, including formal warnings, probationary
periods, and partial termination of benefits for certain
products.
Finally, beyond AGOA, we need a 21st century partnership
for AGOA--for Africa, a 21st century partnership for Africa.
We first need to pass AGOA, and then we need to come to a
bipartisan consensus on a strategy for a 21st century U.S.-
Africa partnership, a strategy spanning trade deals,
investment, capacity-building, and integration of new digital
realities. Thank you.
[The statement of Mr. Runde follows:]
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Chairman SMITH. Thank you, Mr. Runde. Now I recognize Mr.
Nasser. Please begin.
STATEMENT OF AF NASSER, VICE PRESIDENT OF SOURCING & COE,
CINTAS CORPORATION
Mr. NASSER. Good afternoon, Chairman Smith, Ranking Member
Blumenauer, and members of the subcommittee. Thank you for
holding this hearing and the opportunity to testify on the
importance of these trade preference programs.
My name is Af Nasser, and I am the vice president of
Sourcing Center of Excellence and Supplier Diversity for the
Cintas Corporation.
Cintas helps more than 1 million businesses of all types
and sizes get ready to open their doors with confidence by
providing a wide range of products including uniforms, mats,
mops, restroom supplies, first aid and safety products, fire-
extinguishers and testing, and safety training.
Cintas' operations touch almost every corner of the United
States, and our employee partners are a driving force behind
our shared accomplishments. Cintas employs approximately 45,000
individuals in our workforce today.
Before discussing our international supply chain, I would
like to spend a moment highlighting our diverse supply chain
here in the United States.
In fiscal year 2024, Cintas spent more than $320 million
with certified diverse suppliers which we define as a company
that is headquartered in the United States or its Territories,
and is owned, operated, and controlled by a U.S. citizen who is
a minority, woman, or veteran.
On a daily basis, I work closely with our global suppliers
to ensure they conduct business in the same ethical and moral
standard that we do as a company. Each and every supplier must
comply with a vendor code of conduct as a condition of doing
business with Cintas.
In addition to sourcing from more than 23 countries, Cintas
operates four manufacturing facilities that provide for
standard uniform needs.
Currently, we procure goods and products from a global
network of international vendors, including Haiti, Kenya,
Ethiopia, and Madagascar, which are being discussed here today.
Renewal of the African Growth and Opportunity Act, and the
Haitian Hemispheric Opportunity through Partnership
Encouragement Act, and the Haiti Economic Lift Program Act, in
advance of next year's expiration is critical to the continued
success of Cintas.
We strongly support the committee's efforts to reauthorize
these trade preference programs and reduce trade barriers
wherever possible.
As we look to diversify our supply chain and minimize
imports from China, Cintas's ongoing investment in Africa is
critical. For this to be successful, preferences which enable
us to source from markets on the continent are essential.
I would like to spend a few moments highlighting a couple
of countries starting with my mother's home country of Kenya.
Kenya is a small but important supplier of apparel to the U.S.
market and to Cintas.
In 2023, U.S. apparel imports from Kenya were $488 million,
accounting for just over half of 1 percent of total apparel
imports.
Cintas' apparel imports from Kenya accounted for
approximately 5 percent of our total imports.
Long-term renewal of AGOA would provide increased certainty
for production, and as a result, potentially open increased
opportunities in Kenya.
Regardless of the legislative vehicle, we urge the
committee to take a close look at the rules of origin to ensure
they remain intact, or ideally enhanced, so that Kenya's
apparel industry can not only remain competitive but also
expands.
I would also like to thank the committee, and specifically
Congressman Wenstrup, and many others on this dais today for
their work around the reauthorization of HOPE/HELP Act.
Renewal of these programs will provide economic hope to
Haiti as it struggles through its current political and
security challenges.
Haiti is an integral part of our Western Hemispheric supply
chain. We first began producing in Haiti in 2002 and have
greatly expanded our manufacturing footprint there over the
last 20 years.
Today, we indirectly employ approximately 4,000 Haitians
through our dedicated supplier relationships.
Our suppliers' large and dedicated labor pool also set the
industry standard. For example, our primary Haitian supplier
operates in clean and safe environments. A nutritious lunch and
chilled water are available to all the employees. Once a week,
a licensed physician from Port-au-Prince visits the plants to
address any health concerns that employees may have.
Even with these worker benefits, our Haitian supplier
remains the most highly productive and cost-competitive source
that we have globally.
Currently, a significant portion of apparel production
originates on Haitian soil. Unfortunately, the latest security
challenges and arrests in the country have significantly
hindered our ability to ship to the United States.
We are cautiously optimistic that Kenya's commitment to
insist the Haitians will be instrumental in allowing a return
to normalcy for its citizens, the Port-au-Prince region, and
the country.
In closing, reauthorization of these critical trade
preference programs will help reinforce the United States'
commitment to develop in Africa, Haiti, and beyond.
Thank you again to the committee for the opportunity to
testify, and I look forward to any questions you have at the
appropriate time.
[The statement of Mr. Nasser follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH. Thank you, Mr. Nasser.
Ms. Muhika, you are recognized.
STATEMENT OF MARGGIE PETERS MUHIKA, DEPUTY REGIONAL DIRECTOR OF
AFRICA, SOLIDARITY CENTER
Ms. MUHIKA. Chairman Smith, Ranking Member Blumenauer, and
distinguished members of the committee Ways and Means,
Subcommittee on Trade. Thank you for holding this hearing and
for the opportunity to testify.
I represent the Solidarity Center, the largest U.S.-based
international worker rights organization, with programs in
approximately 70 countries, including 20 African countries and
Haiti.
We partner with unions and the other labor organizations to
help workers attain dignity on the job, justice in their
communities, and greater equity in the global economy.
Today I will highlight working conditions in Africa and
Haiti, including examples of what unions are doing to promote
worker rights in Kenya and Lesotho. I will then conclude with
recommendations.
The need to safeguard labor rights in Africa has never been
greater. Africa has the fastest growing, youngest population of
any continent and will be home to a quarter of the world's
workforce by 2050.
Annually between 8 million and 11 million young people
enter the African labor market without a guarantee that they
will find work, let alone decent jobs.
The labor market in Africa is characterized by a wide
income disparity between a small number of formal public and
private employees and a vast informal economy.
In Africa, 87 percent of the workforce is informal. Jobs in
the informal economy have the potential to provide productive
economic activity for a growing demographic, but the sector
remains highly unregulated with insufficient legal protections
for informal economy workers and notable violations of their
rights.
In Kenya, three trade unions representing Kenya's formal
sector workers in food, health, education, and metals, signed
MOUs with the formal worker associations in their respective
sectors.
This means that Kenya's trade unions have brought informal
sector workers under the union umbrella. For the first time,
this gives them access to legal frameworks that protects formal
workers.
According to the International Trade Union Confederation's
Global Rights Index, 84 percent of countries in Africa denied
workers access to justice; 40 percent arrested and detained
workers; 93 percent violated the rights to collective
bargaining, while workers in one out of five African countries
experienced violence.
For example, we lost a prominent human rights lawyer and
trade unionist, Thulani Maseko, to violence, a devastating loss
for workers across Africa.
Despite the challenges facing workers in Africa, we have
witnessed some progress. In Lesotho, three leading apparel
brands and a major supplier of denim signed binding agreements
with a coalition of labor unions and women rights
organizations.
Together they are addressing and preventing gender-based
violence and harassment in garment factories through mandatory
education and awareness trainings, and the establishment of an
independent reporting and monitoring system with remedies,
including termination for abusive behavior.
The Solidarity Center is proud to have helped negotiate
these agreements and to implement ongoing trainings for
thousands of workers and managers.
The progress we see in Africa is eclipsed by the turmoil
and lawlessness in Haiti where the fragile climate has left
garment workers unemployed and leaving in extreme precarity.
Existing institutions have limited capacity to hold
employers accountable for noncompliance with labor law. This
has been a long-standing challenge for Haitian workers, a topic
detailed in Solidarity Center's 2020 testimony before this
subcommittee, covering consideration for the renewal of the
Caribbean Basin Trade Partnership Act.
Despite the present insecurity in Haiti, our experience
implementing programs tells us that there will be a high risk
of labor rights violations after the crisis abates.
For that reason, it is critical that the U.S. pursues a
worker-centric trade policy that advances sustainable economic
development and protects--and promotes labor rights.
In Haiti it should mean that regional supply chains produce
and rely on decent jobs, and employers and policymakers are
held to account when they break the rules.
To achieve a worker-centric approach to trade, we have
several recommendations: One, trade unions and work
organizations must be fully included in all phases of
negotiations through the design and implementation of trade
policies and initiative;
Two, the U.S. must prioritize worker-centered trade
policies leveraging trade and trade preference programs to
achieve enforcement of labor laws and to compel the
establishment of binding mechanisms that meaningfully address
rights violations;
Three, U.S. development assistance policy should support
the role of trade unions in advocating for labor rights in the
context of trade, including with USAID missions;
And lastly, the U.S. Government should prioritize and
promote long-term stability in Haiti as a means to ensure
economic recovery, a prerequisite for upholding labor rights.
Thank you for the opportunity to share Solidarity Center's
perspective. The Solidarity Center remains committed to
centering workers and trade policy, and leveraging trade to
advance labor rights.
We appreciate the work of this subcommittee to uplift the
voices of workers and unions worldwide. I look forward to your
questions.
[The statement of Ms. Muhika follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH. Thank you, Ms. Muhika.
I now recognize Mr. Buchanan from Florida for his
questions.
Mr. BUCHANAN. Thank you, Mr. Chairman, I want to thank all
of our witnesses. It is good timing for us to lead a delegation
to Africa next week--or this Friday actually. So we are very
excited about that, and these issues will be at the top of the
burner, so to speak.
I did want to go back, look at the big picture, Mr. Runde.
You said that one-fifth is what, in terms of trade that we do,
compared to the Chinese, with Africa. $282 billion the Chinese
do, by numbers, $84 billion that we do.
How do we close the gap? We say we need a new agreement,
but we need a new and an improved agreement that helps these
folks, a billion of them, in Africa, because obviously I think
it is a new frontier, as you can see Mr. Richmond's story, and
we really need to up our game.
We talk a good game, but we don't deliver, and I--there is
a lot of us in there. But don't sugar-coat it. Tell us how you
really feel.
Mr. RUNDE. Okay. I will try. Thank you. Thank you,
Congressman. So I think we have--we have not updated our
cassette tape on Africa. Africa suffers from a negative media
coverage. There have been studies in ``The New York Times'' and
others, it is just all negative. And so we have failed to see
Africa as an opportunity.
The Chinese Communist Party sees Africa as a win-win
opportunity. Unfortunately, much of our partnership with Africa
to date has been oriented around foreign assistance.
I am all in favor of foreign assistance. I worked at AID, I
wrote a book on American soft power, I am all for that. That
has got to be one piece of a much bigger conversation.
So we need an updated partnership. Getting AGOA passed, if
we don't reauthorize, like--I think I made it clear, that not
reauthorizing AGOA is a--there will be a party in Moscow, there
will be a party in Beijing if we don't reauthorize it. So first
we got to do that.
I would like to see some updates. Then I think we need to
think about a more ambitious trade agenda for Africa. I think
it is fantastic that you and Chairman Smith are leading these
delegations to Africa. I think it is very, very important.
I think we need to see Africa as a win-win partnership.
They have other partners today. In the year 2000, when AGOA was
started, I don't believe China was the number 1 trading partner
for any country in sub-Saharan Africa. Maybe, I don't know if
it is 35, I don't know if it is 40--someone can tell me, but it
is going to be a lot.
Mr. BUCHANAN. Let me--I only got five minutes, so I want to
ask, Mr. Richmond, let me ask you, one of the big advantages a
lot of the Asian countries have had, is it basically free labor
or very low-cost labor? How does that equate in Africa? Is
everybody--does that make some sense there, or what happens
with the labor component in Africa?
Because that is obviously--maybe they are making three
times what they made, but you are able to get a lot more
competitive, but in a sense, it also hurts indirectly--might
hurt the U.S. What are your thoughts?
Mr. RICHMOND. The cost of labor and what people are making
in China and Asia, you know, it has gone up a lot in recent
years. You know, my view on that is that actually the money
that we pay and when--and I, you know, I heard the comments the
gentleman from Cintas made.
I mean, we also have--we are paying--our lowest paid worker
is making, you know, like, well more, like double of what the
country's minimum wage is. You know, we offer a free catered
lunch every day, free transportation, all of those things. It
is meaningful.
The labor cost in China and in Asia has gone up, but they
are far more efficient and they are far more experienced. They
have been doing this for, you know, decades.
And the labor force in Ghana and most African countries
need that training. They need those skills.
Mr. BUCHANAN. Thank you.
Mr. Nasser, let me ask you, did you say you were born in
Kenya?
Mr. NASSER. My mom was born in Kenya. My dad was born in
Tanzania.
Mr. BUCHANAN. Okay. Well, that is one of the areas we have
been talking about for like four or five years, about a free
trade agreement. That is something that clearly needs to get
done. The momentum should start there.
And the crazy thing is, I think it is very, very
bipartisan. I can't understand why we can't be serious and get
that done in a way, because that is part of the reason we are
losing.
To a guy that has been in business for a long time, when I
got a sense of a good acquisition, I went and closed it. And we
need to close the deal with that. What are your thoughts
quickly?
Mr. NASSER. I think that there are a lot of opportunities
in Africa. The institutions that we have there are very
flexible and very adaptable.
I think the biggest challenge for us, when you think about
the logistics of Africa, is the lead times, and the
transportation and the carrying costs associated with that long
duration.
We look for business continuity in business resiliency, and
we like to make sure that we are diverse--there is a lot of
diversification. But I think we need to have a structure in
place in Africa that makes it more palatable, from an
investment perspective and from a timing perspective, to make
sure that we invest more in Africa.
Mr. BUCHANAN. Quickly, Mr. Runde, did you have anything you
wanted to add in terms of a free trade agreement there?
Mr. RUNDE. We should absolutely begin negotiations for a
free trade agreement with Kenya.
Mr. BUCHANAN. Thank you. I yield back.
Chairman SMITH. Thank you. I now recognize Ranking Member
Blumenauer.
Mr. BLUMENAUER. Thank you, Mr. Chairman, and thank you all
for being here.
Ms. Muhika, you have a fascinating background in some of
the more complex countries in this area. You point out in your
testimony, both Haiti and sub-Saharan Africa struggle with high
levels of informal employment.
This increasing casualization of work can lead to rampant
labor abuses and precarious income.
Given the low level of government capacity and the highly
informal nature of work across Africa, how can we best ensure
that trade is a force for good that helps protect workers'
rights and lift livelihood?
I appreciate your focus on a worker-centric trade policy,
and I wonder if you can elaborate on this.
Ms. MUHIKA. Thank you for that important question. There
are several ways that the United States Government should
leverage trade policy and other laws to improve conditions of
work for workers in informal sector.
One of the most important approaches is improving
conditions for workers in the informal sector, is to include
them as stakeholders in discussions and negotiations about the
development and implementation of any trade policies.
Their voices are essential to having a worker-centered
approach to trade.
The U.S. Government should continue to invest in foreign
assistance that strengthens government institutions and enables
civil society to exercise fundamental labor rights.
Technical assistance is vital to ensure that governments
develop labor inspectorate regimes that establish effective
social protection schemes for workers and that are engaged in
labor diplomacy.
All this to say that workers must be put at the center of
any conversation on trade. Thank you.
Mr. BLUMENAUER. Thank you.
Any observations from your perspective about what we should
be doing in Haiti, given the chaotic situation that is there,
the long-term consequences of United States failure. Do any of
you have some perspective on what we should be doing in that
regard? Mr. Runde?
Mr. RUNDE. Thank you, Congressman. I really hope that we
can renew the Haiti-HELP Act this year. The best social program
in the world is a job. Companies are already leaving as we
speak.
I really hope that the Congress can coalesce around one
bill. Let's, I hope, let not the perfect be the enemy of the
good on the Haiti-HELP Act.
Mr. BLUMENAUER. Further observations? Mr. Nasser.
Mr. NASSER. Yeah, I think the extension of Haiti-HELP for
an additional 10 years is welcome, but it would be ideal if
Congress at some point can consider something more permanent
for us to establish more predictability in that region.
Mr. BLUMENAUER. Thank you.
Thank you very much, Mr. Chairman.
Chairman SMITH. Thank you, Mr. Blumenauer.
I now recognize Mr. LaHood from Illinois.
Mr. LaHOOD. Thank you, Mr. Chairman. I want to thank the
witnesses for your valuable testimony here today and adding to
this conversation.
I am really pleased that we are holding this hearing today
regarding trade preference programs that of course are due to
lapse in 2025, including AGOA and certain programs for imports
from Haiti.
Trade preference programs like AGOA and GSP serve as
important mechanisms for the U.S. to encourage global economic
growth and promote American goodwill and trade priorities
abroad.
We have heard a little bit this morning obviously about the
competition that we have with China and Russia, and other
adversaries, particularly in Africa.
I also serve on our Select Committee on China and also on
the Intelligence Committee. And as we think about, how do we
win the strategic competition against the CCP and China,
particularly in Africa, I think you do that on the economic
front. So things like AGOA, things like engagement, need to be
there.
And I would say, as we compete against Belt and Road and a
number of other initiatives from our adversaries, we need to
highlight that what we focus and predicate our policies on, are
competition, the rule of law, enforcement mechanisms, things
that work.
Sometimes it is very hard to compete against China and
Russia and others because they don't play by the same sets of
rules and standards that every other industrialized country in
the world does, and that puts us at a disadvantage.
So I just want to mention that as we think about how do we
compete in this space.
I also want to acknowledge Trade Subcommittee Chairman
Adrian Smith for his leadership in advancing the renewal of
these programs, particularly this bill to renew and update GSP,
which was advanced out of the Ways and Means Committee in
April.
And I am committed to working with you, Chairman Smith, and
our colleagues on the committee to get this legislation across
the finish line. It is vitally important when we think about
our economic diplomacy around the globe.
In my view, it is crucial that the United States continue
these programs as an effective countermeasure to the CCP and
their efforts to replace the United States as a global economic
leader.
I will also mention, I serve as the co-chair of the Digital
Trade Caucus, and I have been especially concerned about
China's digital trade and domestic regulatory laws that promote
surveillance, allow for worker and human rights violations, and
run counter to our American ideals.
Moreover, China is now exporting these principles through
targeted initiatives like the Digital Silk Road, which is a
series of developmental projects intended to build up
countries' telecommunication networks, AI capabilities, e-
commerce, and mobile payment systems, and surveillance
technologies. They are rampant throughout much of Africa and
other Third World countries.
It is my view that the United States needs to promote a
strong agenda when it comes to digital trade and explore ways
to modernize our trade programs, bringing them into the 21st
century.
Mr. Runde, I am going to start with you. In your written
testimony, you highlight that the U.S. has failed to recognize
Africa's growing digital economy, opening the door for China to
capitalize on our absent guidance there.
In your opinion, how can the United States regain its
leadership in this space, and what steps can we make to ensure
that we do not get in our own way again?
Mr. RUNDE. Thank you, Congressman. We can't fight something
with nothing, and so we need to have a new digital partnership
with China. We ought to be investing in training and capacity-
building in Africa around digital issues. We should be
supporting ICT policy development.
We should also be incentivizing rip-and-replace. Seventy
percent of 4G in Africa is Huawei. We do not want the digital
rails of the future of Africa controlled by the unholy trinity
of Huawei, Alipay, and ZTE.
Mr. LaHOOD. Thank you for that. And with my remaining time,
Mr. Runde, could you elaborate on what changes you think could
be made to AGOA to better develop commercial partnerships and
facilitate digital trade more effectively?
If you can comment on that, and then I have a follow-up.
Mr. RUNDE. Yeah. So I think--I suggest in my testimony that
language could be included to develop a partnership around
emerging international standards and reducing barriers to
digital trade in Africa, including cross-border data flows and
internet access.
I think we ought to be thinking about using our foreign
assistance and the DFC and the EXIM Bank as wrap-arounds to
AGOA, and I think there could be language in the legislation
that reflects that.
Mr. LaHOOD. And as we think about that, if you look at the
digital chapters that we put into USMCA as kind of a benchmark
and a model, I mean, is that what we ought to be looking at in
terms of a bilateral digital trade agreement with countries
like Kenya and others?
Mr. RUNDE. Yes. I think we should have a Kenya free trade
agreement, and we should begin negotiations as soon as
possible. And I would like to also see, yes, I would like to
see--I think we should be working toward--I think the USMCA
digital chapter is what we should be working towards.
Mr. LaHOOD. Thank you.
Thank you, Mr. Chair.
Chairman SMITH. Thank you, Mr. LaHood.
I now recognize Mr. Kildee from Michigan.
Mr. KILDEE. Thank you, Mr. Chairman and Ranking Member
Blumenauer also, for holding this really important hearing, and
I agree with much of the sentiment that has been expressed,
most particularly, Mr. Runde, you made the point that the U.S.
presence is not nearly adequate for us to have any of our
values manifest in the relationship that we have, nor any of
our values manifest for the people of the African continent.
It makes a difference where the investment comes from and
where the relationships are built, and if we defer to our
adversaries, we have no ability, really, to have a meaningful
impact on the continent.
I will be joining Mr. Buchanan on this delegation next
week, so I very much look forward to exploring these issues
much further.
And I also agree that reauthorization of AGOA with, I
think, significant improvements, is absolutely necessary for us
to achieve the goals that we have been addressing.
And I think in particular, it would be a mistake for us to
reauthorize without using the opportunity to elevate these
relationships, specifically--and this has been referenced--in
the area of worker rights, where the USMCA example, I think, is
actually a pretty good one.
Not only do we have pretty significant professions but also
an enforcement mechanism built in and some prerequisites, some
pre-requirements, in order for the benefits to go into effect.
I am curious, and I wonder if I could start with Ms.
Muhika, if you could talk a little bit about some of the
implementation strategies. I mean, it is already embedded in
AGOA that there is a requirement to comply with internationally
recognized worker rights provisions.
But if you could address how these National Action Plans on
business and human rights in several African countries,
particularly Kenya, are being used to pursue implementation of
what we already have agreed to pursue.
Ms. MUHIKA. Thank you. I think it is too early to assess
the impact of National Action Plans on business and human
rights. For example, as you have stated, Kenya adopted its
first NAPs in 2019, while Uganda in 2021, and several other
countries are in the process of developing their own National
Action Plans.
The United States can support trade unions and workers to
participate in the development of these plans in their
countries, alongside other stakeholders from civil society
organizations.
Mr. KILDEE. Thank you. All right. I know it has been
mentioned, specifically regarding Kenya, that the
administration is pursuing an executive-level agreement. I
agree with some of my colleagues that we ought to be pursuing a
full bilateral trade agreement that has all of the necessary
mechanisms for enforcement and implementation.
But I wonder, Ms. Muhika, if you could comment
specifically, I have been concerned that earlier this year,
members of the Kenya Medical Practitioners, Pharmacists, and
Dentists Union, including the General Secretary of that
organization, were reportedly attacked for peaceably protesting
some differences that they had with Kenya's healthcare system.
What can we do, what can the U.S. do to prevent those sorts
of practices, those sorts of attacks, including specific
attacks on labor leaders, which has a chilling effect on
advocacy on behalf of workers?
Ms. MUHIKA. Thank you for that important question. I am a
Kenyan citizen, and I only moved here to Washington, D.C. last
6 months. So I totally understand your concern.
And as it regards to the Kenyan doctors, where we saw a
blatant attack on Kenya's Secretary-General of the Kenya
Medical Practitioners and Dentists Union, Dr. Davji--and I must
say that he is a personal friend of mine. Before I took on my
current role, I was the country program director for the
Solidarity Center based in Nairobi. So I did work alongside the
doctors union in Kenya and many other unions for about 4 or 5
years--I believe that the United States Government can play a
critical role in preventing such attacks on workers and on
labor leaders.
First, the U.S. Government must continue to support
mechanisms that can provide resources to human rights defenders
under threat or in exile.
In moments of acute crisis, we know our partners rely on
our support from the--rely on support from the United States to
enable them to access legal representation, relocation
assistance, and medical services.
Second, labor leaders under threat benefit from the United
States public support. When senior United States Government
officials meet with workers and labor leaders, when ambassadors
invite labors leaders to the United States embassies, when
elected representatives take time to connect with workers
during overseas travel, like what you are doing next week, and
as you have possibly done on many occasions, it affords them a
profile that offers them protection, and it makes a difference
to the workers personally.
And I will conclude my interventions there. Thank you.
Mr. KILDEE. I appreciate it. I wish I had more time because
I would love to hear from the other panelists. Maybe some of
you can comment as we pursue this.
And, finally, before we depart for this delegation, if any
of you have specific issues that you would like us to raise in
the various places we will be visiting, please reach out to our
offices. I would appreciate it very much. Thank you.
Mr. RUNDE. What countries are you visiting?
Mr. KILDEE. Kenya, Tanzania, Gambia, and Cabo Verde.
Chairman SMITH. All right. Thank you.
Next, I recognize Mr. Estes from Kansas.
Mr. ESTES. Well, thank you, Mr. Chairman.
And thank you to all of our witnesses for being here today.
You know, as a representative from Kansas' 4th
Congressional District, I am honored to represent many farmers
and ranchers in Kansas. You know, agriculture is a major
economic industry in my home state. Kansas is the number-one
producer of wheat and sorghum and number-three producer in
cattle and beef processor in the United States.
Agriculture trade is a key way the Sunflower State connects
with the rest of the world, including sub-Saharan Africa. In
fact, in 2023, Kansas exported goods valued at $294 million to
sub-Saharan Africa.
Last fall, I visited Ethiopia and Rwanda to engage in and
advance discussions on trade with the United States among
several other items. In Kansas, wheat farmers recently returned
from a trade mission to sub-Saharan Africa where they were
seeking to bolster the relationship between the United States
and the region in hopes of strengthening and expanding access
to the international markets.
Kansas ag producers benefit from open markets and free and
fair trade, and, hopefully, the renewal of the African Growth
and Opportunity Act, AGOA, will help expand market access. It
is crucial that we have these conversations now so that we can
renew AGOA before it lapses next September.
Mr. Runde, in renewing AGOA, how can we assure fair market
access commitments for U.S. agricultural products?
Mr. RUNDE. Thank you, Congressman. I do think that--a
couple of things. There has been some issues around pork and
chicken, in particular in certain countries in Africa,
specifically South Africa. I know a number of pork producers
have expressed concern about that.
AGOA has the ability to resolve--it has in it the
resolution of bilateral trade disputes as one of the reasons by
which they qualify for AGOA benefits. So if we have bilateral
trade disputes in agriculture, we ought to be using AGOA
qualification as saying, hey, you know, if you want to qualify,
let's try and work this out.
I also think--it certainly seems to me that AGOA has
provisions, you know, to require that barriers to U.S. exports
are eliminated, including unjustified sanitary and
phytosanitary barriers. I also think that, if those don't work,
we ought to think about WTO formal complaints, specifically in
the case of, say, South Africa.
And then, finally, I have heard some good things about
supporting more support for some of the USDA farm agricultural
export promotion programs. So I think all of those things would
be things I would consider, Congressman.
Mr. ESTES. Thank you. And, obviously, one of the key goals
we have with AGOA is how do we move the AGOA countries from the
preferential program to, quote-unquote, graduate and be part of
stronger reciprocal trade agreements.
Are countries ready to make this jump, and how can we get
more countries to do that?
Mr. RUNDE. Thank you, Congressman. I think that we need to
fix the concept of graduation. In my testimony, I said
countries like Mauritius are now middle-income countries, and
you basically graduate to nothing, which is terrible. When this
was originally envisioned 25 years ago, the idea was this was a
halfway house until we could develop free trade agreements with
bilateral countries or with regions the way we have with CAFTA-
DR and Latin America.
I would hope, as I said in my testimony, that we would
begin again to have bilateral free trade agreements in Africa.
I think we should begin free trade agreement negotiations with
Kenya immediately, and I also think we should be thinking about
regional trade agreements with West, Southern, and East Africa.
Thank you, Congressman.
Mr. ESTES. Yeah. I mean, that is kind of--we kind of
undercut a little bit of the value of AGOA without following up
with those bilateral trade agreements once we are done. Yeah.
As I mentioned earlier, one of the countries I visited last
fall was Ethiopia, whose AGOA status was terminated in 2021 due
to violations stemming from a civil war in the Tigray province
or Tigray region. This has obviously jeopardized growth in
investment in the region, and that followed the most recent
AGOA renewal in 2015.
Obviously, Ethiopia is part of the discussions that I had
there as well as others. We would like to have that reinstated,
and it is working to address those issues. Obviously, there
were lots of concerns as you have rebel activity, and that
happens scattered throughout the world.
Given some of the heightened risk and instability, how do
we make sure that we make countries recognize the value of
being more participative? Are there ways we can strengthen AGOA
to help with that certainty and help make it more attractive,
Mr. Runde, for other countries to participate?
Mr. RUNDE. So, in my testimony, I talked about that we
ought to be--there are some improvements. I think that the
Coons-Risch bill has some examples of some specific
improvements around trade.
I also think we ought to be looking at some specific
initiatives around digital and mining, and we ought to use our
foreign assistance in some ways to kind of be wraparounds to
AGOA. Ethiopia is a really big country. We can't ignore it. We
have often relied on it as sort of a security partner in that
part of the world, and so I am hoping that we can get to a
better place with Ethiopia at some point.
Mr. ESTES. Yeah. Thank you. And free and fair trade is such
an important part for the world. It has lifted more people out
of poverty over the last 70 years, and we want to continue to
have that.
Mr. RUNDE. Trade in the private sector is what lifts people
out of poverty. Foreign aid is a supporting actor in this, but
the real actor is the private sector.
Mr. ESTES. Right. Thank you.
Mr. Chairman, I yield back.
Chairman SMITH. Thank you, Mr. Estes.
I now recognize Mr. Panetta from California.
Mr. PANETTA. Thank you, Mr. Chairman.
And gentlemen, ma'am, thank you for being here.
Obviously, I am on the Ways and Means Committee, but I am
also on the Armed Services Committee. So, obviously, trade is
important, but security is important as well. And I haven't
heard too much testimony about that today, and so I am going to
talk about that a little bit.
And yes, Mr. Runde, thank you for the thumbs up because you
have got my first question.
But before I get there, look, I think, obviously, we know
and, as you have said, the 2025 expiration of AGOA comes as we
begin an exit, though, from Niger and potentially Chad, at
least militarily in our U.S. forces. We are seeing a
deteriorating security environment all across the Sahel, an
area that I have had help in calling a ``deja coup'' of an
area, is what we are seeing.
So I do believe it is critical to understand how offering
market access to others in the region allows the U.S. to
improve the livelihoods and create favorable conditions for new
security partnerships. Access to U.S. markets is a tool that we
can and should wield to advance development while supporting
the ability of our African partners to hedge against security
threats, including political instability and, yes, VEOs'
violent extremism.
I have been an advocate for more U.S. attention to the
economy and security of sub-Saharan Africa, as I sit--as I
mentioned, especially based on the committees that I am on.
Some of the fastest growing economies in the world, as you have
talked about, are located on the continent, and those same
states are challenged, though--challenged, though, with porous
borders, very weak governance, surges in violent extremist
organizations, and an increased presence not just from China
but Russia, as you mentioned as well, Mr. Runde.
But securing the Sahel requires more than providing
conventional military support. I think we can all agree with
that. So we must support robust economies amongst our African
partners to support good governance, prevent economic
exploitation that threatens regional security, and enable
greater influence from terrorist and extremist organizations.
That said, I am curious to see how we can improve AGOA and
similar programs, and I hope to hear more about how to expand
upon these programs' successes and modernize them to reflect
the changed security and economic realities.
So, Mr. Runde, as you have heard and as you know, we got a
withdrawal from--a military withdrawal from Chad, a military
withdrawal from Niger. We saw it in Mali. We saw it in Burkina
Faso. And we have seen a void that has been created and
obviously being filled by our near peers' competition. And
those types of voids, they significantly impact our
counterterrorism efforts and regional surveillance capabilities
as well in that area.
As U.S. AFRICOM and the Department of Defense consider new
security partnerships--which will be interesting to see how
that develops--to backfill these strategic locations, we are
also hearing concerns that some of these states may succumb to
democratic backsliding, like we have seen pretty much all
across the Sahel, as I mentioned.
That said, you talked about improvements to AGOA. Let me
ask you, do you think one of the improvements we could amend
AGOA could be to enhance capability-building assistance and
instill good governance?
Mr. RUNDE. Thanks. The bad guys can fill voids today. So
they are a near-peer, soft-power competitor, not just a near-
peer, hard-power competitor.
China and Russia--so China is selling security for diamonds
and gas, basically. Africa is going to go from 1.1 billion to
something like 2.5 billion people. There will be more African
citizens than citizens of China and India in 25 years.
There is a whole series of--we are going to need hundreds
of millions of jobs. Either we are going to have a demographic
dividend in Africa or we are going to have something else. I
want a demographic dividend.
So absolutely. I think AGOA is one of the pillars of our
partnership. We need a whole series of other things as
wraparounds. So I agree with you, Congressman, the sorts of
things that you are talking about.
But I do think dictatorships partner with dictatorships. So
the more members of the Star Wars bar of thug regimes, you
know, they are going to partner up with Russia and China. And
so I think we, you know, should want to enable better
democratic governance not just because it is the right thing to
do, but oftentimes, democracy--there was a book written many
years ago called ``The Democracy Advantage'' about how
democracies ultimately, over the long term, have better
economic performance.
So it is in our interest. We don't want these countries
making nice with China because there they are going to have
these ports. There is more than 20 ports basically controlled
by China, and 70 percent of the digital rails of the future of
Africa are controlled by Huawei. It is not a great situation
for us, sir.
Mr. PANETTA. Exactly. So China is bringing the economic
investment, Russia is bringing the security investment, and
that puts us on the sidelines.
Mr. RUNDE. Right. And so to the extent that we step back,
they can fill voids. This isn't 1995 anymore whether in the
Taiwan Strait or in the Sahel.
Mr. PANETTA. Exactly. Thank you. Thank you.
Thanks to all of you.
I yield back.
Chairman SMITH. Thank you, Mr. Panetta.
I now recognize Mrs. Miller from West Virginia.
Mrs. MILLER. Thank you, Chairman Smith and Ranking Member
Blumenauer, who I think is still here.
Thank you all for being here today.
The AGOA program has proven invaluable for economic growth
of sub-Saharan countries empowering African women and increased
opportunities for American producers, and it is vital that
Congress commits to renewing and strengthening AGOA as soon as
possible.
As we begin negotiations for AGOA, it is equally important
that we consider the broader goals of strengthening bilateral
ties with countries around the world to counter China's malign
influence. This committee has made great strides to do so
through marking up critical legislation to reauthorize GSP, but
we can still do better.
It is imperative that we remain optimistic towards enacting
free trade agreements with our allies, particularly Ecuador, as
we work to renew GSP, AGOA, and the other crucial programs that
we are discussing today.
One important provision of both AGOA and the Haiti HOPE Act
is the inclusion of apparel as an eligible product. Under AGOA,
U.S. imports of apparel rose from $696 million in 2000 to $1.4
billion in 2021. In Haiti, apparel industry exports account for
nearly 90 percent of total exports. Importantly, Haitians have
shown resilience despite the unrest in their country and are
still showing up to work.
Mr. Richmond, as an employer of 5,000 workers in a
developing country, how have you witnessed the apparel industry
lift citizens out of poverty, and what more can Congress do to
help the growth of this industry?
Mr. RICHMOND. Thank you. We have witnessed great things,
and that is exactly why we started our business, is that we
recognize the power for good that the apparel industry has.
Again, everyone we hire--right--all 5,600--okay. Maybe not
all--maybe 5,500 because some of those are accountants with
specialized training. But, you know, the real factory workers,
they have no experience. There is no educational requirement,
right? Everyone comes in. Most of them have never had a formal
job. Many don't have a bank account, right?
So we hire them. We train them. They get opportunity,
right? They have bank accounts. They are part of the Social
Security program now with the government, right? They pay
taxes. All of these things that make them productive, right?
And they do make a wage that not only they can live on but
they can--we have countless stories of women who joined us at
one level and then have been promoted to supervisory or
management positions and now are paying for their siblings or
others to go to school and those sorts of things. I would be
happy to send, you know, separately countless stories of those
that we have.
Mrs. MILLER. Well, do companies like yours need a strong
sense of certainty of the American preference programs in order
to commit to your investments in the region?
Mr. RICHMOND. Absolutely. I mean, we do and so do so many
others who are, you know, looking to grow this. Again, there
are so many now brands. Everyone is looking to source from
Africa, but there aren't enough qualified suppliers like
ourselves. There needs to be more in order to incentivize the
brands to place business there, right? And ultimately--yeah.
Sorry.
Mrs. MILLER. Yeah. That is okay.
Mr. Runde, another area of particular concern for me is our
reliance on China and Russia for critical minerals. I have
introduced several pieces of legislation, including the End
Chinese Dominance of Electric Vehicles in America Act, to close
these loopholes and to counteract the leg up our adversaries
have in this sector.
I appreciated hearing from you that Africa houses
substantial critical mineral deposits. How could inclusion of
critical minerals in AGOA benefit American producers and
consumers?
Mr. RUNDE. Thank you, Congresswoman, and thank you for your
leadership on the Ecuador Caucus as well.
Look, if we are going to have a carbon transition, we
better love mining to the tips of our toes. I was at AID for a
long time, and I like AID a lot. I was in the international
development business, and I worked at the World Bank Group. But
asking my friends in the international development community to
work on mining projects, they would rather get a root canal
than work on mining projects. Most people don't want to work on
mining projects.
We need to spend a lot more foreign aid on minerals and
mining. We need to make sure it is clean, that there is fair
money, that people are getting a fair share of the resources,
and that the people are treated well labor-wise.
Mrs. MILLER. Okay. Quickly. Quickly.
Mr. RUNDE. Yeah. Shoot.
Mrs. MILLER. I want to ask you about the Chinese trade
agreements in South America----
Mr. RUNDE. Yeah.
Mrs. MILLER [continuing]. And what an individual preference
program for a country like Ecuador could mean for competing in
the region and the possibility of a full free trade agreement.
Mr. RUNDE. We absolutely should have a free trade agreement
with Ecuador. I think the IDEA Act is okay, but I think if
China has a free trade agreement with Ecuador, it is a lost
opportunity for us. So if they are to join the Caribbean Basin
Initiative, I think it is okay.
I am in agreement that we should have a free trade
agreement with Ecuador as soon as possible. We have a pro-
American President. There is going to be an election in Ecuador
soon. They have been knocking on our door for a while. We ought
to show up for our friends.
Mrs. MILLER. Thank you so much.
I yield back.
Chairman SMITH. Thank you, Mrs. Miller.
I now recognize Ms. DelBene from Washington state.
Ms. DelBENE. Thank you, Mr. Chairman and Ranking Member
Blumenauer, for holding this important meeting.
And thank you to all of our witnesses for joining us and
taking the time today.
Like many of my colleagues, I believe that AGOA is a
critical tool in the American foreign policy arsenal to promote
development and create jobs in sub-Saharan Africa. It has also
led to jobs and economic growth in Washington State. We are one
of the most trade-dependent States in the country, and my
friend and former colleague of Washington State, Congressman
Jim McDermott, was one of the original authors of AGOA back in
the early 2000s.
So while AGOA has been transformational for certain African
economies and certain sectors, there is so much more the U.S.
should be doing to meet the economic needs on the continent,
and if we succeed, American workers and our economic security
and theirs will be better off, also.
I know you were in mid-discussion on this. Mr. Runde, in
your testimony, you recommend that Congress modernize AGOA by
focusing on Africa's digital economy as well as critical
minerals. I wanted to see if you could say a little bit more
and discuss the benefits and challenges of allowing AGOA
beneficiary countries, perhaps those that meet certain
heightened labor and environmental criteria, access to American
tax credits for EVs and batteries.
Mr. RUNDE. Thanks. I have put a lot of time into trying to
understand this issue.
As I understand it, there are no countries in Africa today
that currently make electric vehicles nor make electric
batteries, so--and there are no tariffs on basic raw materials
and materials today. So I understand the--so I am interested in
finding ways for us to support mining and minerals in Africa.
It is not--we need to be doing a lot more to--I think the
minerals--the minerals security partnership, I think, is a--we
should be doing a lot more in Africa around that.
If we are going to have a line item in AGOA or some sort of
language in AGOA specifically about a--for AGOA eligibility for
the IRA, it is going to be for the future. As of right now, we
would have to think about 3 to 5 or 7 years from now.
So I think we should be doing a lot more with the minerals
security--with the minerals strategic partnership--the security
partnership, and we should be using a lot more of our foreign
assistance both bilaterally and using the DFC. We need to be
doing a lot more in flooding the zone on minerals with our soft
power.
Ms. DelBENE. Thank you. And I also wanted to ask you a
little bit more--building off of Congressman LaHood's
question--what we can do to help African entrepreneurs sell
online--this is on the digital side--sell online or how we can
help finance Africa's broadband build-out.
Mr. RUNDE. Thank you. I do think we need a new partnership
with Africa--a new digital partnership with Africa. I think
that AGOA can call for that. I think we can have it call for
that in the legislation. I do think there are a series of
things we can be doing around supporting ICT policy
development, training.
I also think we ought to make available money for rip and
replace of Huawei. 70 percent of the 4G in Africa is controlled
by Huawei. I mean, this is crazy. I mean, we are not going to
be--you know, this is very, very bad.
I do think that, you know, the USMCA digital chapter, I
think, is the gold standard, and we should work--we should all
be--we should be--all of our trade agreements in the future
should work towards the USMCA digital chapter.
Ms. DelBENE. Or try to provide some type of digital--I
mean, there is obviously doing full agreements. Folks have also
looked at other ways to do digital, so----
Mr. RUNDE. Yeah. I would love to see us have a bilateral
free trade agreement with Kenya, and I would love us to go
return to seeking free trade agreements in Africa.
Ms. DelBENE. Are there other particular countries?
Mr. RUNDE. Yes. Certainly, Kenya, I would start
immediately.
Ms. DelBENE. I think Kenya is there. I was wondering if
there is anyone outside of Kenya that would be----
Mr. RUNDE. We ought to think about potentially regional
trade agreements along the lines of CAFTA-DR. I would say West
Africa, East Africa, and Southern Africa. That would be the
other thing I would do.
Ms. DelBENE. Thank you.
Thank you, Mr. Chairman, I yield back.
Chairman SMITH. Thank you.
I now recognize Mr. Arrington from Texas.
Mr. ARRINGTON. Thank you, Mr. Chairman.
Witnesses today, we appreciate your insights.
I will be taking my first CODEL outside of my freshman trip
to Israel to Africa this week to meet with leaders of several
African nations, some of which are included in this trade
partnership.
I am not a trade expert, but my understanding is that the
benefit to both parties and specifically to the United States
for doing AGOA-like trade deals is to integrate supply chains
with the U.S. and not China, to provide maybe cheaper inputs
for manufacturers in the U.S. with products coming from, in
this case, AGOA nations, and to develop that relationship so
that, as it matures, as their market markets and economies
mature, we can have this sort of more developed and more mature
bilateral and reciprocal trade relationship where we are not
only giving AGOA partners access to our markets with their
goods, but they are opening their markets to the U.S. equally
for our goods and services.
In the case of agriculture, I hail from west Texas where we
generate a lot of ag and energy products, and when I look at
the data on the tariffs in Kenya on ag products like peanuts,
sorghum, beef, and dairy, it is anywhere from 25 percent to
over 50 percent. And those are just the tariff barriers, and
there are non-tariff barriers that I won't enumerate. And then
you look at Ghana's average ag tariff, which is 17.5 percent,
Nigeria 15.9. Our average tariff in the United States is five
percent.
So, at some point, this needs to be a two-way street, a
mutually beneficial relationship that has matured beyond just
the initial investment in AGOA. We are 25 years now into this.
I don't know. It seems to me we ought to be asking the
question, why hasn't it developed further?
I am all for AGOA, from what I understand of it, and that
there have been benefits accrued to both sides of the deal, but
we are 25 years into it, and we are still--we still don't have
the reciprocity and the fair access that I think we should
expect as American policymakers.
So, I guess, Mr. Runde, I would ask you first, is that a
fair characterization? Is that a realistic expectation 25 years
later into this deal?
Mr. RUNDE. Thank you, Congressman. I 100 percent agree with
you. It has been 25 years. The world has changed. Africa has
changed. We have changed. There are about 450,000 U.S. jobs
linked to U.S.-Africa trade. So it is not totally a one-way
street. And there is something like 1.3 million African jobs
linked to--that is sustained by AGOA, but we have not met the
full potential of AGOA by any stretch of the imagination.
When it was set up, as I mentioned earlier, it was meant as
sort of a halfway house for us to start building free trade
partnerships with Africa. We are now starting to see several
things happen in the last 25 years. We are now having countries
becoming middle-income status like Mauritius. They are about to
graduate--given the current rules, they could graduate to
nothing because we were going to set up free trade agreements.
Unfortunately, there has been a decrease in appetite of
political will for us to pursue free trade agreements in the
United States, and I regret that very much.
And the other thing I would say that is different from 25
years ago is China is eating our lunch----
Mr. ARRINGTON. Eating our lunch.
Mr. RUNDE [continuing]. On the continent.
Mr. ARRINGTON. Yeah. Yeah. I get that sense, too. Somebody
told me that, in the last couple of decades, they have doubled
their trade and export to the African continent. Do you have
better data on that?
Mr. RUNDE. Yeah. So our trade with Africa is one-fifth the
amount that China has with Africa.
Mr. ARRINGTON. Well, and ours is going down and theirs is
going up----
Mr. RUNDE. Yeah.
Mr. ARRINGTON [continuing]. At about the same rate.
Mr. RUNDE. And they are probably the number-one trading
partner for several dozen African countries when it was zero 25
years ago.
Mr. ARRINGTON. We need to be a lot more aggressive.
Mr. Chairman, we have to have a higher expectation from our
partners, and I hope we move forward in that way.
Last question, Mr. Nasser, for you. We are the largest
cotton patch in the world. A third of the cotton exported out
of United States comes from a 100-mile radius of Lubbock,
America, which is where I live. It is the largest population
center in my district.
And the rules of origin requirements are important in AGOA
so that we are benefiting both countries and that--the textile
supply chain is one that is benefiting us because it is
including the AGOA nation raw cotton product and the United
States.
Is that being enforced as--if it is not adequately being
enforced, how are people taking advantage of that, and how do
we ensure that those provisions, and that one in particular,
are being enforced so we are benefiting both countries in the
fullness of the supply chain in cotton in particular?
Mr. NASSER. Yeah. So I can speak from a macroeconomic
perspective if it is being enforced. I can tell you that we
adhere to the right standards and compliances within our supply
chain.
Mr. ARRINGTON. Okay.
Thank you, Mr. Chairman. I yield back.
Chairman SMITH. Thank you, Mr. Arrington.
I now recognize Ms. Sanchez from California.
Ms. SANCHEZ. Thank you. I want to thank the ranking member
and the chairman for holding a hearing on this important issue.
It is pretty clear that the U.S. can't simply focus on
providing aid to emerging economies, whether it is sub-Saharan
Africa or Haiti, to develop. Africa features some of the
world's fastest growing economies and a booming young
population, which creates the perfect environment for both
American and African businesses to thrive if we can get this
right.
U.S. investments, market access, and economic incentives
can fuel job creation. It can also boost local economies and
help develop new innovative industries in those emerging
economies.
AGOA has created a generation of young women entrepreneurs
and significantly improved women labor participation rates
across Africa, which is a very good thing. So Congress should
not let a program like this go without being renewed, like we
did with PEPFAR, because these are programs that really do
create great partnerships and create good outcomes.
We have to show emerging economies that we can be a
reliable economic partner, even though their, you know,
economies are cyclical--they go up, they go down, people may
experience turbulent economic times--but if we were to
reauthorize AGOA in our trade preferences with Haiti, I think
that that would garner a lot of good will, not to mention, as I
said, the economic partnerships that can be created.
Having said that, though, as many of my colleagues have
said, we are all very much in favor of reauthorizing AGOA. We
should take this opportunity to try to improve it, try to make
some needed reforms to these programs, because just creating
market access alone is not going to be enough to stimulate the
economic development that we are looking to see in Africa. So I
am hopeful that we can come to agreement on what we can do to
update AGOA to make it a better agreement for both of us.
We know that in some of the countries that we trade with,
there are issues that still linger of gender-based violence, of
hereditary and child slavery. We know that there are many
places around the world and many partners that we trade with
that continue to have issues with worker rights. And we know
that this is, you know, not unique to Africa, certainly, but we
do see that there are those ongoing problems that we need to
address. And, you know, that is despite the fact that we do
have a worker rights emphasis in the AGOA eligibility criteria.
In Haiti, which has, you know, been very challenging, wage
theft and worker exploitation issues have really harmed the
Haitian population, and that has just further aggravated the
poor economic conditions in that country. As I said, we have an
opportunity to do better, and I think we must do better.
My first question is for Ms. Muhika. An innovative labor
agreement that has emerged from the AGOA garment sector is a
multi-stakeholder agreement to stop gender-based violence in
Lesotho. That binding agreement is the first instance in which
apparel brands and their suppliers entered into enforceable
agreements with workers, specifically to stop gender-based
violence.
In addition to expanding on the significance of that
agreement, I would be interested to hear your thoughts on how
the U.S. can use its trade policy to encourage agreements among
producers, labor advocates, and civil society groups,
specifically to address labor violations.
Ms. MUHIKA. Thank you, Ms. Sanchez, for that important
question. And I would like to reiterate that the Solidarity
Center is proud to have supported the agreements that you are
talking about in Lesotho.
I think the U.S. development assistance policy should
support the role of unions in advocating for labor rights in
the context of trade, and this should include the USAID
missions, you know, across the world, especially in sub-Saharan
Africa.
And then, lastly, the U.S. Government must prioritize
worker-centered trade policies, leveraging trade agreements and
trade preference programs to achieve enforceable labor laws and
to compel the establishment of binding mechanisms that
meaningfully address rights violations.
All this to say that the U.S. Government has the
opportunity to be a leader, to show that when you send our
workers in labor policies or trade policies, you are doing the
right thing. Thank you.
Ms. SANCHEZ. Thank you.
I have one more question. I am almost out of time, but I
would accept the answer in writing after.
Mr. Runde, in your written testimony, you recommended that
Congress can consider including language on critical minerals
in AGOA, and while I agree that the U.S. should look to new
markets, I do have concerns that emerging economies that are
rich in natural resources--like many of the countries in
Africa--have been, in the past, subject to exploitation,
including environmental and labor exploitation which actually
undermines their development.
So, my question for you--which I will take in writing
after--is how can the U.S. work with African countries,
including through our development financing tools, to create
vertically integrated supply chains rather than just extracting
the raw resources?
And I thank the chairman for his indulgence, and I yield
back.
Chairman SMITH. Thank you.
I now recognize Mr. Smucker from Pennsylvania.
Mr. SMUCKER. Thank you, Chairman Smith, for convening
today's important hearing.
I do want to echo my colleagues' calls for an on-time
renewal of AGOA. It is important that we prevent any lapse in
the program to give certainty to the businesses that have
invested in sub-Saharan Africa or plan to. They need to know
that those incentives will remain in place.
I also want to join my colleagues in expressing to the
Biden administration that there is bipartisan support in
Congress to deepen our trade relationship with Africa, and I
urge the administration to resume dialogue on the U.S.-Kenya
Free Trade Agreement.
Mr. Runde, you know, we have discussed a lot--there have
been a lot of people before me here. We have talked about areas
of reform to strengthen the trade ties. We have talked
expanding--from graduation policies, expanding agriculture
access, reforms to grow the apparel sector. Anything else? Any
other ideas that you have for reform that we should consider
that haven't yet been raised today?
Mr. RUNDE. Yeah. So I do think--certainly, a 10-year
renewal or a 16-year renewal, as is in the Coons-Risch bill
that is kind of mimicking the USMCA language.
Mr. SMUCKER. Businesses want the long-term predictability?
Mr. RUNDE. Yeah. I think that is good.
I also think the current arrangement--there is, like, an
annual review. It is pretty onerous. I think we could have
reviewing the eligibility every 3 years instead of every 1
year. I think that would be another simple thing we could do.
So I think those are things that I think--I also think some
of the proposals for giving a broader menu for the executive
branch and not just having an on-off switch. I think those are
all good things, Congressman.
Mr. SMUCKER. Okay. Great.
Critical mineral supply chains have been talked about as a
critical issue for the country. We want to move some of that
out of China. I know you have mentioned it, but how can AGOA
help with that? How is that important?
Mr. RUNDE. So, as I said, as of right now, there are no
African countries making electric vehicles or making electric
batteries, and there are no tariffs on--specifically on raw
materials themselves or minerals.
I do think, though, that we ought to be--we ought to be
doing a lot more with Africa on minerals. There is the Mineral
Security Partnership that we need to be--we should be engaging
a lot more aggressively in Africa. I do think that we need to
be putting a lot of our foreign assistance--a lot more of our
foreign assistance and development finance resources on mining
and minerals.
I don't think the American people are going to accept
switching from the internal combustion engine to electric
vehicles and batteries controlled by the People's Republic of
China. It just will stop.
Mr. SMUCKER. Thank you.
Mr. Richmond, your story is really fascinating. The apparel
sector represents a logical area for AGOA partners to fill in
the missing pieces so that fabrics cannot only be sourced
domestically but also processed and transformed to a finished
good all within the African continent.
From your experience operating in Africa--you have talked
about this already, but--you know, what are some of the things
that would continue to allow the industry to flourish? What are
some of the things that have held it back from doing that at
this point?
Mr. RICHMOND. Thank you for the question because then there
are a few points that I have made notes about from some other
things that I would also like to address.
First of all, there was a question about investment timing,
right? So, again, key to the apparel textile industry in Africa
and under AGOA is building these textile mills, having those
inputs available.
I will give a real-world example of our own, right? We have
already engaged with the IFC. We have gone through due
diligence and everything to establish a new textile mill in
Ghana--right--which would be a unique fabric that eliminates 99
percent of the water use from traditional fabric in the way it
is dyed, right? This is a somewhere from $15- to $20 million
investment that we are interested in making.
Mr. SMUCKER. Sure.
Mr. RICHMOND. We can't do that today, right? We don't know
if AGOA is going to be renewed.
Mr. SMUCKER. Yeah.
Mr. RICHMOND. So that is on hold. That is just us. We are
just one small player.
Mr. SMUCKER. That leads to sort of my next question, which
is, you know, you have been planning and you have hired
thousands of workers----
Mr. RICHMOND. Yeah.
Mr. SMUCKER [continuing]. Based on the idea that AGOA
exists and will continue to exist, and I am sure now, as you
are thinking ahead for the company, your strategic planning has
to look very different and there has got to be a lot of
questions there.
Mr. RICHMOND. Yes. It does include--that is why we are
interested in looking at doing our own mills--textile mill, and
there are others, you know, in West Africa who are investing,
you know, a couple hundred million dollars that we know of to
build out that vertical cotton supply, right? That is key, and
that is what is going to happen.
But it also goes to, like, this utilization question about
why, after 20, 25 years, hasn't there been more of an impact. I
mean, I think we all know that, as a country, we have bought
from China, right? For the last 20, 25 years, we were all--they
made it very easy for us to buy from China. It is not easy to
do business in Africa, right? But the Chinese made it very easy
and made it very comfortable for all of the brands to just buy
everything there.
Now, of course, there is this tremendous focus on how can
we source elsewhere, and now it is that investment that needs
to happen. I think that, over the next 20 years, that if there
is a long-term, you know, renewal of AGOA--I think 20 years
from now, we will see a completely--it will be a completely
different conversation than what is having today.
Mr. SMUCKER. Well said. I am out of time, but thank you.
Mr. RICHMOND. Thank you.
Chairman SMITH. Thank you, Mr. Smucker.
I now recognize Ms. Sewell from Alabama.
Ms. SEWELL. Thank you, Mr. Chairman, and I want to thank
you and the ranking member for having this hearing.
I am a very strong supporter of AGOA, and I really
appreciate our conversation today has heightened the fact that
it is a bipartisan and bicameral support for renewal of AGOA.
I, in recent months, have met directly with AGOA country
leadership, civil society, and the business communities about
the importance of AGOA but also what we can do to improve it. I
most recently traveled with Chairman Jason Smith on a trade
CODEL to Africa. We visited Benin. We visited Mauritius and
Madagascar.
And I can tell you that a lot of the countries were really
nervous about reauthorization and were requesting it be
reauthorized this year partly because of what you said, Mr.
Richmond. Companies need to have assurances. You are placing
bets on materials, supply chain, way into the future and want
some assurances.
I also know that reauthorization without trying to reform
would be a missed opportunity. When I think about the kinds of
reforms, I am thinking about smoothing out graduation
requirements. I am talking about--you said something about the
annual review process and making it either biannual or every 3
years. Consider strengthening our labor and environmental
standards for them as well as looking at strengthening
enforcement generally.
Having said all of that, I want to kind of go along the
lines that my colleague, Linda Sanchez, did. I think it is a
missed opportunity if we are not trying to build supply chains
within Africa. Instead of just extracting minerals or
extracting cotton, how about creating real supply chains?
Mr. Runde, will you talk a little bit about that and how we
can strengthen AGOA and actually strengthen the economic
viability of Africa if we are not just extracting but we are
rather helping to build?
Mr. RUNDE. Thank you, Congresswoman, and thank you for your
leadership on AGOA.
So, I think, after COVID, when the People's Republic of
China said they were going to cut off our pills and cut off our
ventilators, that was grounds for a divorce. And I think it
creates an opportunity for Africa, so--in terms of friend-
shoring, near-shoring, ally-shoring. So having AGOA as sort of
a basic rules of the game is critical for that to happen.
I do think that, as I mentioned in my testimony, I mean,
Africa is a very different place than it was 25 years ago when
this was enacted. They are more smart.
Ms. SEWELL. And it will be even more different 25 years
from now.
Mr. RUNDE. Twenty five years--yeah. It is going to be--and
so, you know, your trip, I am sure, made that clear. Mauritius
was not a middle-income country 25 years ago----
Ms. SEWELL. And now it is.
Mr. RUNDE [continuing]. And now it is.
Ms. SEWELL. And it is afraid to graduate.
Mr. RUNDE. It is afraid to graduate because it graduates to
nothing and loses it. So I am very much tracking your comments,
Congresswoman.
So I think all of the things that you have suggested, I
think, make a ton of sense. I think we should--I think we need
to pass AGOA, and then we need to think about a 21st century
partnership with Africa. So I think we need to lift our sights
and see--I mean, Africa has got a lot more partners. They don't
have to wait around for us. They have got--there are two
generations of successful entrepreneurs. You have met them.
Ms. SEWELL. Absolutely.
Mr. RUNDE. They would like to work with us, but we have got
to show up.
Ms. SEWELL. And also, with respect to bilateral agreements,
I agree with you that we should be doing those.
Can you talk a little bit about the benefits of bilateral
agreements in addition to having these trade preference
agreements in--trade preference programs with AGOA?
Mr. RUNDE. Thank you, Congresswoman. So I think we ought to
pursue a free trade agreement with Kenya. I think it would set
a model for future agreements in Africa. We need to create a
path towards bilateral and regional trade agreements with
Africa. That was the vision 25 years ago by the folks who were
on this dais 25 years ago. I think we should fulfill that
vision.
I think that it is a--so I think we should--you know, I
think that if we get a free trade right with Kenya, also with
the African--the AfCFTA, the regional agreement--like, the
train is leaving the station.
Ms. SEWELL. Those would be really great. I agree.
Mr. Richmond, I was talking about supply chains and
creating opportunities--direct opportunities for Africa to not
just supply the cotton and then send it abroad to make the
apparel. Can you add to that your thoughts on creating better
supply chains in Africa?
Mr. RICHMOND. Yeah. I mean, it is necessary, right? Like I
said, there are--you know, I know in Benin and Togo, it has
started already to do that. West Africa, obviously, has a
tremendous amount of cotton, and it is a shame that,
historically, it has been sent out and all the value has been
extracted elsewhere and reimported.
Ms. SEWELL. Exactly.
Mr. RICHMOND. But, absolutely, that is what needs to
happen.
Ms. SEWELL. Well, Mr. Chairman, I know that people are
anxious to get it reauthorized soon, soon, soon. I think we
should really take our time to make sure that we are using this
as an opportunity not just to reauthorize but to improve and to
offer some really meaningful reforms for AGOA as well,
obviously, with in mind to pass it in 2025. Thanks.
Chairman SMITH. Thank you, Ms. Sewell.
Now, I recognize Mrs. Fischbach from Minnesota.
Mrs. FISCHBACH. Thank you, Mr. Chair, and I appreciate it.
Thank you to all of you for being here. This is critical
stuff.
And I think it was Mr. Arrington mentioned agriculture and
maybe even Mr. Estes had mentioned it, and I am from a heavy ag
district, and so it is a critical export for us. And one of the
things--I think that it was Mr. Estes that just kind of glanced
on the pork issue. And it is a huge export. About 30 percent of
the pork produced is exported.
But my understanding is that, in South Africa, it--the U.S.
pork exports only account for about 1.3 percent of the pork
imported into South Africa. And it is not necessarily that they
are not eating pork. It is some unscientific issues, trade
barriers that are in line.
And maybe, Mr. Runde, if you want to--you are nodding, so I
am sure you have got something to add on that.
Mr. RUNDE. So, first, I eat a lot of bacon, and so thank
you--I want to thank the producers of your district for all
that they are doing. So please pass that along.
I think President Obama had similar concerns about pork in
South Africa. And I do think that the pork manufacturers--the
pork producers in the United States should be emphasizing the
job losses in the United States to these unscientific,
unjustified sanitary and phytosanitary barriers.
And AGOA has, as I mentioned earlier--that part of it to
qualify is the resolution of bilateral trade disputes. This is
starting--in the Obama administration, it was seen as a
bilateral trade dispute. So I do think that it certainly falls
in that category.
And then I also think AGOA has provisions to require that
these barriers--these unjustified sanitary and phytosanitary
barriers be addressed.
And, finally, I think that--I would hope that the Biden
administration might consider bringing this as a formal
complaint to the WTO. So I understand your constituents'
concerns, and I share them.
Mrs. FISCHBACH. So USTR should be pursuing this?
Mr. RUNDE. Absolutely, Congresswoman.
Mrs. FISCHBACH. Okay. I appreciate that.
Just kind of on another note, as we have been talking, you
talk a lot about the free trade agreement, and, unfortunately--
and I will get--they are not pursuing them. The Biden
administration is not pursuing them right now, and it is very
disappointing not only for ag but for a lot of other industries
that are not able to take advantage of those.
As a matter of fact, I was in Ecuador with Chairman Jason
Smith on a visit there, and we see China moving in, and we are
not pursuing those free trade agreements. And so we are going
to really lose out on a lot of what is going on.
But you have something to add?
Mr. RUNDE. Yeah. Thanks, Congresswoman.
As I said earlier, our trade with Africa is one-fifth the
trade activity with China. In Ecuador, we have had two--we have
a pro-American President. There is going to be an election
coming up. They had to sign a free trade agreement with China.
They really would like to sign one with us. They have been
knocking on our door. We are not showing up for them. I think
the IDEA Act is okay as a halfway house. I would like us to
have a full free trade agreement with Ecuador.
So I agree with you, Congresswoman. And so I think part of
it is we can't fight something with nothing, so what is our
something?
Mrs. FISCHBACH. Yeah. I absolutely agree. We really should
be pursuing those.
And maybe if anybody else has anything else to add about
maybe ag trade? I mean, I would appreciate any kind of or any--
nope? Okay.
Well, I will yield back, but I do appreciate you being
here. And it is a huge concern for not only ag trade but free
trade. Thanks.
Chairman SMITH. Thank you, Mrs. Fischbach.
I now recognize, from Virginia, Mr. Beyer.
Mr. BEYER. Mr. Chairman, thank you very much.
I thank all of you for being here.
Mr. Runde, I want to follow up on your conversation with
Congresswoman Sewell about reforming AGOA.
Senator Coons and Senator Risch, in a bipartisan way, have
proposed that countries maintain high-income status for a
period of 5 consecutive years in order to graduate, and others
have proposed graduating sectors once they reach certainly
thresholds rather than graduating the entire country. You know,
graduating this sector, hold that sector.
How should we assess the merits of these proposals?
Mr. RUNDE. Thank you, Congressman. So I think that the
original concept of graduation was to imagine that they would
graduate to free trade agreements. Unfortunately, we don't have
free trade agreements.
My suggestion would be is that we allow them to--African
countries to stay even if they achieve middle-income status. So
I think the current arrangement certainly isn't workable with
Mauritius basically graduating to nothing and losing their
status.
So I would like us to raise our sights and return to an
agenda of free trade agreements in Africa, whether it is Kenya
and elsewhere. That was the original intent 25 years ago.
So I think the Coons-Risch bill is excellent. I have a few
quibbles with it, but I think--on that specific issue, I think
it is--what I will argue for is to keep countries in until
there is a time that we have free trade agreements with Africa.
Mr. BEYER. Thank you. Mr. Runde, I am also curious about
your thoughts on the frequency of AGOA country assessments. One
of the criticisms we hear from the private sector is we have to
do this every year. And there are proposals to do it every 2
years, every 3 years. What would you think about decreasing the
frequency, and would that incentivize firms to invest more in
sub-Saharan Africa?
Mr. RUNDE. So I think it is a great idea. I think it is
burdensome to the countries, and I think it is a--I think every
3 years, I think, would be an appropriate number, sir.
Mr. BEYER. One last AGOA question. The binary nature of it.
You are in or you are not. When countries fall out of
compliance, we have no choice. I have talked to U.S. Trade Rep
Katherine Tai a number of times about Ethiopia, you know,
failing on a human rights thing and getting kicked out,
regardless of the impact that it could have on the long-term
stability laws, regardless of the impact of who it is affecting
in the country.
You suggest a menu of enforcement options: Warnings,
probation periods, and the like. What are the advantages to
this nonbinary approach?
Mr. RUNDE. Thank you, Congressman. I think that the Coons-
Risch bill has a very good menu. I think AGOA is a trade
mechanism, not a political mechanism.
I am sorely tempted to find sticks against South Africa. I
think what they are doing with China and Russia is obnoxious. I
don't like how they are treating Israel. We can agree or
disagree. But I just think that I find that the South African
Government is--you know, has moved from being nonaligned to
something else, and so I can understand the temptation to find
a stick.
I think we need a menu of options, whether it is informal
warnings, probationary periods, and partial termination of
benefits. Also, a lot of the sectors that are more pro-West,
including agriculture and others, that are beneficiaries of
AGOA and South Africa would be unduly punished for the actions
of the South African Government if we were to use this as a
stick.
Mr. BEYER. Thank you.
Ms. Muhika, you have this unique role as the program
director for the Solidarity Center in Ethiopia and other East
African countries, so like--probably unlike most of the panel,
you come at this from a left-of-center perspective from a labor
perspective.
Can you give us any hope or any sense that there will be a
world in which free trade agreements agree again? Clearly, the
Biden administration has not been enthusiastic about it. We
expect none in the remainder of the year. If in a, you know,
different world, Ambassador Lighthizer comes back, again, there
was no enthusiasm under his leadership for free trade
agreements.
When can the pro-free and fair trade advocates among us
have some hope for free trade agreements again?
Ms. MUHIKA. Thank you for that question. I would like to
get back to you comprehensively in writing as I would not want
to speak about free trade agreements right now. Thank you.
Mr. BEYER. Well, in my 33 seconds, Mr. Runde, do you have
an opinion?
Mr. RUNDE. So I do think--I think all of our trade
agreements starting with the GAD had a Great Power Competition
push behind it. So I think there are geoeconomic--if I can use
that term--geopolitical and geoeconomic drivers oftentimes
behind our trade agreements, and I think--I fear that Great
Power Competition with China is what is going to bring us back
to the table on free trade agreements. So soon, it is going to
be that.
Mr. BEYER. Thank you.
I yield back, Mr. Chair.
Chairman SMITH. Thank you, Mr. Beyer.
Next, Mr. Kustoff from Tennessee.
Mr. KUSTOFF. Thank you, Mr. Chairman.
And thank you to the witnesses for appearing today.
Mr. Runde, if I could with you--and I know that my
colleague asked about pork. Maybe if I could ask about poultry.
I represent Tennessee's 8th Congressional District. It is a
very heavy ag district. It exports about $2.2 billion worth of
agriculture-related products.
And so as it relates to poultry and maybe specifically
South Africa, I know that South Africa has been applying
prohibitive antidumping duties to U.S.-origin poultry since the
year 2000. Over 20 years. Another factor that has resulted in
low political activity is South Africa's decision probably to
raise tariff duties on our products. Of course, there are other
categories of U.S. poultry that does not have access to the
market. We have talked about fair market access for our
products. It is important, I think, to all of us, certainly to
my district.
Could you talk specifically, though, about South Africa's
current trade restrictions on U.S. ag products, and how do
these barriers impact U.S. farmers and U.S. producers?
Mr. RUNDE. So I eat a lot of bacon and I also eat a lot of
chicken, so I want to thank your constituents.
But I also think poor people around the world rely on cows
and they rely on chickens for their protein. And so I think we
should enact pro-poor agricultural policies in the Global
South. So we should be supporting animal husbandry as part of
supporting food security in general.
As I said earlier, the Obama administration had concerns
about pork and I also believe poultry back in 2015 with South
Africa. So this is not a new issue that we have. This is a pain
point in our relationship with South Africa.
As I said earlier, the resolution of bilateral trade
disputes is part of AGOA eligibility, and AGOA has the
provisions that require that barriers to U.S. exports be
limiting, including unjustified sanitary and phytosanitary
barriers.
And I think there have been concerns about avian flu, but I
also understand that there has been sort of major progress in
that area in the United States in terms of our poultry. So I
eat it every day with no concerns, so I would hope our friends
in South Africa would do the same.
I do think, Congressman--I think that we should be
documenting job losses for the American poultry producers as
part of this holdup, and I think we should be demonstrating
that.
And then, finally, I would hope that the Biden
administration would consider even a formal WTO--a WTO formal
complaint on this issue of poultry vis-`-vis South Africa,
Congressman.
Mr. KUSTOFF. Thank you, Mr. Runde.
If I could, maybe in a different area--I know in your
testimony, you said that the United States is not going to
displace China on the continent or match it with the investment
dollar for dollar, but we could compete in certain sectors. So
what are the sectors you think that we could be competitive in?
Mr. RUNDE. So I certainly think there are certain
components in the digital space where I think that is the case.
I certainly don't want--as China moves into whether it is--so I
think--so digital is one. I would like us also to think whether
it is healthcare, whether it is pharmaceuticals. I also think
manufacturing. I also think, certainly, we are very competitive
in agriculture.
So I do think they also--given sort of these global shifts
in supply chains, we want to offer ourselves and should offer
ourselves as a partner with Africa to build this next level
of--they don't want to just be in the extractive business. You
know, it is not the continent of 25 years ago.
To the extent that we have a positive, forward-looking
agenda that speaks to their hopes and aspirations in terms of
their economies, we should be seen as not just--I think China
is seen as an extractive partner, and we need to be seen as an
additive partner, Congressman.
Mr. KUSTOFF. Thank you very much.
Thank you, Mr. Chairman. I will yield back.
Chairman SMITH. Thank you, Mr. Kustoff.
I now recognize Mr. Schneider from Illinois.
Mr. SCHNEIDER. Thank you, Mr. Chairman.
I want to thank the witnesses for first sharing your
insights and perspective--this has been very helpful--but also
your patience as we work our way through the day.
I want to thank the chair and committee for calling this
hearing today. Africa and Haiti are crucial to U.S. interests,
and I am going to touch a little bit on each.
As a member of--in fact, the only member of both the House
Committee on Ways and Means and the House Foreign Affairs
Committee, I am proud that so much of our work is dedicated to
America's global leadership around the world. I often say that
the U.S. is at its best when we lead--when we lead with our
friends and allies, not just looking at the bottom line, but
looking at our strategic interests broadly in a way that is
shared with our allies and reflecting the moral clarity of our
values-based vision for the future.
Of course, there is much strategically to be gained from
working with African countries and allies in Africa. It is the
young population in some of the world's fastest growing
economies, as was noted today. But more than that, it is
crucial that African countries as friends and partners to the
U.S.--we recognize them as such and that we work together
towards a world that is more just, fair, and sustainable.
As was said earlier--my colleague Terri Sewell mentioned
it. Mr. Runde, you touched on it. We need to work to
reauthorize, but not just reauthorize, but to enhance and
improve AGOA, and I look forward to working on this committee
to doing that.
I want to focus most of my--or all of my questions on
Haiti. Abraham Lincoln, our greatest President--and I will note
proudly a fellow Illinoian--was the first U.S. President to
recognize Haiti. Since then, the relationship has been complex
but always crucial, whether geopolitically or through the
strong ties between the diaspora and the island.
Today, Haiti is facing one of its greatest challenges since
independence. We are witnessing a near collapse of the state,
and I hope the Republicans on the House Foreign Affairs
Committee and the Senate Foreign Relations Committee will come
to unblock the crucial funds to help restore calm.
As the administration works with our allies, especially
Kenya, to stabilize the situation in Haiti, we must also think
about the future. We must do everything in our power to ensure
that the future of Haiti is not just a recovery but includes
prosperity and security and that our private sector is able,
willing, and committed to investing to lift up the Haitian
people.
So let me ask Ms. Muhika and Mr. Runde, what can we in
Congress do to best help Haiti going forward? The surge in
foreign direct investment that followed HOPE I, HOPE II, and
HELP in the early part of this century is something this body
can and should be proud of. As Secretary Blinken recently
noted, HOPE/HELP is a vital program.
And as you talk, can you--well, I will leave the question
there for now.
Ms. MUHIKA. Thank you, Mr. Schneider. Unfortunately, I am
not an expert on Haiti, but the Solidarity Center's Haiti team
is happy to get back to you comprehensively in writing.
Mr. SCHNEIDER. Mr. Runde, any thoughts?
Mr. RUNDE. So the best social program in the world is a
job, and I would hope that we renew this year the Haiti HOPE
Act. I think we have talked about making adjustments to AGOA,
and so that may be a little bit more complicated.
I would ask, in all humility, that the Congress coalesce
around one bill. I know there is multiple bills. There is a
number of folks who have they care about Haiti.
The best thing we could do is coalesce around one bill,
even potentially even get to unanimous consent around one bill.
I think companies are leaving now.
I believe it is the seventh largest source of undocumented
people crossing our border, the Southern Border, are from
Haiti. We are going to have more people--if we don't have jobs,
we are going to have all sorts of bad things happen.
Of course there needs to be a political settlement in
Haiti. Of course there needs to be some sort of security
arrangement. I know that there has been, you know--so it is a--
but we have to start with getting this renewed.
Mr. SCHNEIDER. I hear you and one I will note, and maybe
you have thoughts on this, but our colleague, Stacey Plaskett,
has the HOPE for Asian Prosperity Act of 2023.
Do you have any thoughts on what that could do or--well, we
can bring that up in a later conversation.
Mr. RUNDE. I have a opinions on a lot many things,
Congressman. I don't have a view on the different--there is at
least three different bills, if I understand it, sir, and maybe
a fourth. All I would ask is that Congress, in its wisdom,
coalesce around one bill, sir.
Mr. SCHNEIDER. I hear you, I concur, and we need to do more
to help Haiti in a very difficult moment.
And with that, I yield back.
Mr. BUCHANAN. Thank you, Mr. Schneider, I now recognize Ms.
Moore from Wisconsin.
Ms. MOORE. Thank you, Mr. Chair, for allowing me to wave on
this subcommittee, and I want to thank the witnesses for a
tremendous education here this afternoon. I have questions for
all of you. So many questions, so little time, so bear with me.
Ms. Muhika, I am going to ask you this question, and I may
ask others it too. What in your opinion or your research has
prevented really good vertical integration within the African
continent to make them more productive?
I mean, you got a lot of cotton there, but then they have
to send the cotton off to Asia to get it processed, and I think
one of our witnesses talked about the different colors--Mr.
Richmond.
What could AGOA do, in your opinion, to promote vertical
integration?
Ms. MUHIKA. Thank you for that question. Please allow us to
get back to you in writing.
Ms. MOORE. Okay. How about you, should I ask Mr. Richmond,
Mr. Runde, who wants to volunteer?
Mr. RICHMOND. Sure. I will go ahead. Thank you.
Ms. MOORE. Okay.
Mr. RICHMOND. It takes investment in terms of investment
dollars and expertise. Right? Building that out, it is not
rocket science, right, but it does take a lot of money, in
terms of equipment, it takes expertise, bringing--you know, we
have, I mentioned, 5,600 people working for us, so we have a
hundred ex-pats that we have brought from Sri Lanka and
Bangladesh and Philippines and all over, to transfer that
knowledge, right?
Just like China wasn't China 20, 30, 40 years ago. They had
to learn, so.
Ms. MOORE. So, Mr. Nasser, let me ask you, Mr. Nasser,
really quick, Kenya, we are about to go to Kenya in a couple
days, and I know that they are recipients of AGOA, but they
may, quote/unquote, graduate.
What do you think would be the consequences of them
graduating at this time in their development?
Mr. NASSER. Thanks for the question, Congresswoman Moore.
We have a small supply chain in Kenya. It is about 5 percent of
our imports. I am not sure or familiar with the specifics of a
graduation program for them, so I can't comment.
Ms. MOORE. You know, because people have commented--okay,
Mr. Runde, come on, help us out here.
Mr. RUNDE. Thank you, Congresswoman. I am a Packers fan, so
it----
Ms. MOORE. All right. See, I knew that.
Mr. RUNDE. That is good. So graduation, look,
Congresswoman, I think it is a--would be a terrible thing for--
whether it is Mauritius and other countries in Africa, as I
said earlier, AGOA was set up as a halfway house to move
towards free trade agreements.
I hope we can restart dialogue about a free trade agreement
with Kenya. So having a country become middle income and then
graduate from AGOA to nothing is a disaster.
I would suggest that we keep all the countries in AGOA
until such time as we have free trade--work towards free trade
agreements, Congresswoman.
Ms. MOORE. Okay. Now, Mr. Runde, while I have got you here,
you had an interesting discourse with the gentle lady from West
Virginia about minerals. And you said something, like, oh boy,
people would hate going into mining. Then you went on to talk
about how we need to really lean into that.
Can you really clarify for me, because I am very interested
in the exploitation, and I guess, you know, Ms. Muhika would
agree with that, that a lot of the exploitation that occurs in
this sector, and as we move into needing these critical
minerals, can you clarify for me what you mean?
Mr. RUNDE. Yes, Congresswoman, what I was trying to say is
that we need minerals, and we are going to need a lot more
minerals in the future. I believe that the American people are
not going to want to transfer--you know, moving from the
internal combustion engine to electric vehicles and electric
batteries if they are controlled by the Chinese Communist
Party.
I also believe that----
Ms. MOORE. So is this a space where AGOA could skip in
and----
Mr. RUNDE. I think so. I mean, I think we--what I would say
is that we need to be supporting clean, fair, equitable
activities in mining and minerals. We need to raise standards.
There are many fine mining companies around the world, many of
them U.S. companies, British companies, Australian companies. I
think it is----
Ms. MOORE. And they could benefit as well?
Mr. RUNDE. Yeah, absolutely, they----
Ms. MOORE. I only have 30 seconds left. I am sorry to cut
you off, but I have to really ask Ms. Muhika a question again.
I was on an airplane, and some woman squeezed herself into a
middle seat because that is all that was left there, and I
really got depressed by the time I was finished talking to her,
because she works for an international environmental
organization, and she says that it is--everybody in the
development world knows that as soon as you go in and start
helping women and empowering women and lifting women up, people
in the community who are most likely to use that money to spend
it on uplifting the family, that the instance you do that,
domestic violence skyrockets.
I was so depressed after I got off the plane, sitting next
to her. Can you tell me, what, if anything, you propose in the
way of programming to alleviate this outcome?
Ms. MUHIKA. Thank you for that question, and I do not think
I agree with that analogy, but----
Ms. MOORE. Okay.
Ms. MUHIKA [continuing]. We know that labor rights, or
labor in general, is an intersectional issue. For example,
women rights are critical to upholding labor rights. Policies
that hold back women, governments that do not appoint women to
leadership positions, and employers who do not maintain a safe
workplace free from gender-based violence, are stifling up the
advancement of labor rights in general.
So my only response would be that we cannot stop supporting
the advancement of women just because of a different----
Ms. MOORE. I think I saw you shaking your head or doing
something, Mr. Runde. Any thoughts on that?
Oh, you Mr. Richmond?
Mr. RICHMOND. Sure. I mean, I will just say, I mean, again,
as, you know, we employ 76 percent women. In fact, our local
partner in Ghana is a Ghanaian woman.
The studies I have seen show that, you know, when women
bring home money, that it is more likely to go towards
supporting the family and the things it should go to than
otherwise. So I mean, we are big believers in providing those
opportunities.
Ms. MOORE. All right. Thank you.
Mr. Chairman, Mr. Ranking Member, thank you for your
indulgence. Thank you for having this hearing. Thank you for
letting me wave on, and I yield back.
Chairman SMITH. Thank you, Ms. Moore. I certainly thank you
to all my colleagues. I deferred on my questions, but I
certainly appreciate the participation here today.
It has been robust with just about a hundred percent
participation of all subcommittee members. I think it speaks to
the fact that for what we need right now in the world, Africa
offers many, many solutions, offers examples of what the right
thing to do is, unassociated with a commercial name obviously,
but I think that this opportunity gives us a chance to analyze
where we have been, where we need to go.
So let me just say, Mr. Runde, you have touched a bit on
some concerns about South Africa. And make no mistake, they
enjoy vast benefits from AGOA, and yet I think they are
undermining our foreign policy--their partnership with Mr.
Putin and attacking Israel through the International Court of
Justice. These are concerning issues.
Intellectual property protections are lacking, and let me
add that they are attempting also to expropriate American IP
through the TRIPS Waiver Process, again, I think, undermining
our interests, even when our interests are helping the world.
And so I am very, very concerned about that, and I think
this is an opportunity for us to look further in modernizing
how we handle AGOA moving forward.
You know, there is enthusiasm to make necessary changes, to
kind of lift our expectations, but I too was with the
colleagues around Africa a few weeks back where we have seen
great examples of what is working, whether it was in Mauritius
or Benin, other places.
So let's see more of that, but also let's not have our
trading partners, who are doing the right thing all along the
way and utilizing AGOA, and then have nowhere else to go. I
mean, it is hard to even call it graduation when it is a dead
end.
And we owe ultimately the American people better policy
through this effort, and so I would hope that we could dig and
dig deeper.
I hear the comments here and, I think, an appetite for a
trade agreement with Kenya. I am beginning to wonder that the
only people opposed to a trade agreement with Kenya happen to
be at the White House. How unfortunate.
Because as I engage with colleagues here in the legislative
branch, there is this appetite and enthusiasm to get going
here, let's get things done. And this is bipartisan, certainly
on the heels of USMCA that has been bipartisan as well.
So, Mr. Runde, can you perhaps examine further, you said
that a complaint filed through the WTO on South Africa would be
in order. Would you like to elaborate, or could you elaborate
on that a bit?
Mr. RUNDE. I would just say that I understand the
temptation to use AGOA as a stick, but I am trying to resist
the temptation. They have been a bad actor. They are
undermining American policy on a number of fronts, but I do
think we have had to work at our relationship with South
Africa.
And so as I said earlier, the Obama administration had
similar concerns on certain agricultural products, and I
believe they found ways to work with them.
So I think we have a fabulous ambassador in Ambassador
Reuben Brigety. I think he represents us very, very well. I am
a great admirer of his.
And so I know that he has a very difficult job there, but I
do think that some of it needs to be behind closed doors. Some
of it needs to be through calling attention to it through
Congress, and then I think to the extent that we can use
actions, whether through having a dialogue through the AGOA
process but also through the WTO, I think these are all things
that we ought to be looking at, Mr. Chairman.
Chairman SMITH. Thank you. Now, on Kenya, do you have any
numbers, by chance, in terms of what they are already
benefitting from and perhaps how we could benefit more through
a bilateral trade agreement that there is so much support for?
Mr. RUNDE. I don't, sir. But what I will do is, I will come
back to you with some brief thoughts in writing for the record.
Chairman SMITH. Okay. I appreciate that.
Mr. RUNDE. I will do some homework, Chairman.
Chairman SMITH. I appreciate that. I know that we have been
told repeatedly from the administration that they are not
leading on any trade agreements because they don't have the
votes. I would challenge that assertion based on the discussion
we have had here today and other engagements I have had, both
sides of the aisle, in terms of what we should be doing, like
with Kenya.
The fact is that the Trump administration teed up a trade
agreement with Kenya and that the current administration is
unwinding it, stepping back from it, and yet having a
discussion as long as it doesn't involve tariffs.
You know, certainly other colleagues have touched on other
barriers, non-tariff trade barriers, again back to South
Africa, but, wow, there is just so much opportunity,
opportunity for, I would hope, South Africa to improve where
they stand with our country right now, but that is also exactly
what we need.
Our challenges now with China can be resolved with building
relationships. As Mr. Richmond has pointed out, there are great
opportunities there.
And, Mr. Richmond, anything you would like to add to
previous comments?
Mr. RICHMOND. Well, I mean, if you would indulge me, I
would like to actually ask a very naive question.
Chairman SMITH. Okay. Go ahead.
Mr. RICHMOND. And that is, I have heard everybody say that
they are in favor of renewal, reauthorization of AGOA, but--
but--want to take the opportunity to make improvements, and it
is a--you know, it is a one-sided, right, it is a unilateral
agreement, right?
So I guess what I am--one of my naive questions is, what
prevents you from reauthorizing it as is to give the certainty
to investors and yet still work on all of the improvements you
want and enacting those when you have agreed to those? So that
it provided that stability but still the opportunity, like,
that is the part I guess I am naive about.
Chairman SMITH. Well, you raise the concerns about
predictability and stability. I think that is very important,
and just as a gauge, and as we have discussions and I get
various points of input from colleagues and stakeholders, the
urgency to renew it is very present.
So I think that, you know, looking at it--there are also
the expectations, though, that along with that urgency, we need
to deal with some of these things such as the dead end of so-
called graduation. We are going to have to deal with that.
Now, that won't all be resolved, in my opinion. When we
know we need a trade agreement, say, with Kenya, a bilateral
trade agreement with Kenya, comprehensive, and it will take
Mauritius, a great example of what we set out to accomplish,
they are doing the right thing, what is next?
You know, we won't resolve all of that in a renewal in my
opinion, but I think that we need to really examine and put
pressure on the administration, for example, to show some
leadership where the executive branch is most appropriate to
lead in these areas. I cannot emphasize that enough.
So whether it is agriculture that we have heard about,
textiles, adding value, the opportunities are many to make some
corrections but also build what can be, I think, a very bright
future, especially with the fastest growing continent in terms
of population and just so many opportunities.
So with that, again, thank you to our witnesses for joining
us here today. Please be advised that members have two weeks to
submit written questions to be answered later in writing. Those
questions and your answers will be made part of the formal
hearing record.
With that, this subcommittee stands adjourned. Thank you
again.
[Whereupon, at 3:35 p.m., the subcommittee was adjourned.]
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