[Congressional Record Volume 149, Number 169 (Thursday, November 20, 2003)]
[Senate]
[Pages S15289-S15290]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LUGAR:
  S. 1900. A bill to amend the African Growth and Opportunity Act to 
expand certain trade benefits to eligible sub-Saharan African 
countries, and for other purposes; to the Committee on Finance.
  Mr. LUGAR. Mr. President, I rise today to introduce the ``United 
States-Africa Partnership Act.'' This bill builds on the important 
trade and investment initiatives that were contained in the African 
Growth and Opportunity Act (AGOA) passed in 2000.
  The original African Growth and Opportunity Act and the expansion of 
AGOA that I am introducing today emphasize the need to elevate the 
African private sector. The AGOA legislation offers enhanced trade 
benefits, more U.S. private sector investment, and a higher level 
dialogue with African governments. It envisions a new economic 
partnership between the United States and African nations.
  To gain these benefits, African countries are expected to undertake 
sustained economic reform, abide by international human rights 
practices, and strengthen good goverance. These standards have been 
used by the U.S. to stimulate reforms in Asia, Latin America, Eastern 
Europe and elsewhere. There is no reason to expect that they will not 
be successful in Africa as well.
  Private investment tends to follow good governance and economic 
reform, but the private sector takes cues from government policies and 
involvement. It is very much in our interest to play a constructive 
role in the evolving political and economic transition in Africa. A 
stable and prosperous Africa will be better equipped to cooperate on a 
range of shared global problems such as weapons proliferation, 
terrorism, narcotics, the environment and contagious diseases. African 
economic success also can create new markets for American exports. If 
jobs are created and foreign exchange is earned through enhanced 
exports, Africa will have greater capacity to buy goods and services 
from abroad. They will likely purchase machinery, electronics, 
financial services, agricultural products, and many other goods and 
services from U.S. suppliers.
  If we had ignored Taiwan and Korea in the 1960s when they were at 
stages of economic development comparable to many African societies 
today, we would have missed out on enormous opportunities in East Asia. 
Years from now, I hope we can look back and say that we were present at 
a crucial juncture in Africa's growth and development and that we 
played a constructive role in that change.
  In an effort to reverse the persistent under-performance by African 
economies and to stimulate American involvement in Africa, I introduced 
the African Growth and Opportunity Act in the United States Senate in 
1999. Since its enactment in 2000, AGOA has been a positive economic 
force in Africa. In 2002, 94 percent of U.S. imports from AGOA-eligible 
countries entered duty-free. The United States imported $9 billion in 
merchandise duty-free under AGOA in 2002, a 10 percent increase from 
2001.

  Imports from African countries, not counting oil, jumped 50 percent 
last year. In South Africa, sub-Sahara's most important economy, 
exports of automobiles have increased sixteen-fold in the past two 
years. The tiny country of Lesotho, population 2.2 million, generated 
$318 million in AGOA exports in 2002. New export-oriented garment 
factories have created 25,000 jobs. For the first time in its history, 
private sector manufacturing employment--thanks to trade--exceeds 
government employment.
  Performances like this, which occurred despite the recent slowdown in 
world trade, are the direct result of AGOA. The legislation lets 
African countries export some 1,800 products duty-free, without quotas, 
to the United States. It is a direct response to developing countries' 
long-time plea; trade, not aid, is the real key to ending poverty and 
bringing about sustainable, long term economic growth.
  Despite these signs of progress, many Africa economies remain in bad 
shape. Of the 64 least developed countries in the world, 38 are in 
Africa. Per capita output of goods and services actually dropped during 
the 1990s, according to the World Bank, and with only 1.4 percent of 
world trade in 2001, sub-Saharan Africa has been falling behind the 
rest of the world. During the 1990s,

[[Page S15290]]

global gross domestic product grew a robust 44 percent; the figure for 
Africa was only 8.5 percent. From 1990 to 2001, gross national income 
per capita in sub-Saharan Africa actually declined by .2 percent.
  Africa is in need of help, and expanding AGOA should be a part of the 
development strategy for the continent. The experience of AGOA has 
taught us valuable lessons about the path to enhanced investment and 
economic development and has confirmed some of the key principles that 
proponents of market-based development have used to guide policy. 
First, AGOA has demonstrated that a commitment to good governance and a 
positive investment climate is important to economic growth. Countries 
such as Lesotho, which has made significant efforts in recent years to 
promote economic reform and stable democracy, have derived the most 
benefit from the AGOA provisions. Second, the experience of AGOA has 
demonstrated that regional integration is as essential to development 
as access to the U.S. and other foreign markets. Using the 
infrastructure and economic stability of South Africa as a base, 
neighboring southern African countries have worked together to take 
advantage of the benefits under AGOA.
  AGOA should not be seen as an end in itself. Rather, it is an initial 
step designed to expand development and decrease poverty by promoting 
greater integration of Africa into the global trading community. 
Achieving these goals will require both enhancements to the AGOA 
framework and additional steps to address the compelling problems 
facing Africa. Our trade efforts must be part of a broader American 
partnership with the often-neglected countries of Africa.
  This partnership starts with three issues. First, we must help 
address the HIV/AIDS crisis in Africa. In addition to the human tragedy 
that HIV/AIDS has created in Africa, the epidemic severely limits the 
economic growth that would reduce Africa's poverty. When workers are 
forced to call in sick more days than they are able to work, when 
government positions are experiencing regular turnover, and when scarce 
capital must be diverted from investment to dealing with the AIDS 
crisis, it is nearly impossible to build a stable economy.

  Earlier this year, Congress passed legislation establishing a program 
under which the United States will contribute $15 billion over the next 
5 years to address the HIV/AIDS crisis in Africa. The President signed 
this bill into law and has placed his prestige behind its effective 
implementation. It is my hope that this leadership and much needed 
funding will start to turn the tide in the fight against the HIV/AIDS 
epidemic.
  Second, we have begun an effort to rethink the way that aid is 
delivered to the world's poorest countries, most of which are in 
Africa. Earlier this year, the Senate Foreign Relations Committee took 
action on the President's Millennium Challenge Corporation initiative. 
This initiative would deliver up to $8 billion over the next three 
years to the world's poorest countries, and it would condition that aid 
on the development of policies by the recipient countries that will 
make that aid more effective. These policies include a commitment to 
just and democratic governance and economic freedom. The Millennium 
Challenge Corporation would build on the lessons of AGOA, which has 
demonstrated that private investment will flow to countries that build 
a stable, predictable investment climate. The incentives provided by 
Millennium Challenge Corporation dollars would help to establish 
conditions that will cause private investment dollars to flow to the 
poorest countries.
  Third, we need to move forward with enhancements to AGOA itself. That 
is my purpose in introducing the United States Africa Partnership Act 
(USAPA)--also known as ``AGAO III.''' The current AGOA expires in 2008. 
My bill would extend AGOA benefits until 2015. This coincides with the 
goal of the World Trade Organizations to have a ``tariff free world'' 
by 2015. We should take action on this extension soon so that investors 
will have the certainty they need when making investment decisions 
involving Africa.
  AGOA contains a provision that allows least developed countries 
(LDCs) to export capped quantities of apparel made from third country 
fabric to the U.S. duty free. All other countries must use U.S. or 
African fabric inputs in order to receive duty-free treatment. This 
``special rule'' for LDCs expires on September 30, 2004. USAPA would 
extend this provision for four additional years until September 30, 
2008.
  It also would eliminate the import sensitivity test with respect to 
African products and nuisance provisions in the rule of origin for 
apparel. The AGOA rule of origin is modified so that it applies only to 
the essential components of apparel. USAPA also clarifies the 
definitions of certain fabrics for customs purposes, including hand-
loomed folklore articles.
  USAPA would develop initiatives to provide technical and capacity 
building experience. In the area of agriculture, it directs the 
Secretary of Agriculture to develop a comprehensive plan to increase 
import and export abilities in agricultural trade. It also provides 
that 20 full-time personnel of the Animal and Plant Health Inspection 
Service be stationed in at least 10 AGOA eligible countries to provide 
technical assistance in meeting U.S. import requirements and trade 
capacity building.

  In an effort to stimulate business partnerships, the bill I introduce 
today also addresses investment incentives and encourages the Overseas 
Private Investment Corporation, the Export-Import Bank, and the Foreign 
Agricultural Service to facilitate investment in AGOA eligible 
countries. It directs the Secretary of the Treasury to seek 
negotiations regarding tax treaties with eligible countries.
  In addition, it encourages U.S. private investment in African 
transportation, energy and telecommunications and increases 
coordination between U.S. and African transportation entities to reduce 
transit times and costs between the United States and Africa.
  Finally, the bill grants funding for the continuation of the AGOA 
forums and establishes an AGOA task force to facilitate the goals of 
the Act.
  The original African Growth and Opportunity Act launched an effort to 
formulate a new American strategy towards Africa. It sought to 
establish the foundation for a more mature economic relationship with 
those countries in Africa that undertake serious economic and political 
reforms. That effort was supported by virtually all sub-Saharan African 
nations, and it had wide support among American businesses and non-
governmental organizations. We should now seize the opportunity to 
further integrate African countries into the world economy.
  The United States-Africa Partnership Act that I introduce today 
recognizes the enormous potential for economic growth and development 
in sub-Saharan Africa. It embraces the vast diversity of people, 
cultures, economies, and potential among forty-eight countries and 
nearly 700 million people. A stable and economically prosperous Africa 
can provide new partnerships that will contribute greatly to our 
commercial and security interests. I urge all members to support the 
United States-Africa Partnership Act so that we can achieve the mutual 
long-term benefits that it would bring to Africa and to our country.
                                 ______