U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

85–734

" COMMITTEE PRINT ! 108TH CONGRESS

1st Session 

WMCP: 

2003

108–2

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES

R E P O R T

ON

TRADE MISSION TO SUB-SAHARAN 

AFRICA

JANUARY 2003

Prepared for the use of Members of the Committee on Ways and Means 

by members of its staff. This document has not been officially approved 

by the Committee and may not reflect the views of its Members 


E:\Seals\Congress.#13
(II)

COMMITTEE ON WAYS AND MEANS

BILL THOMAS, California, Chairman 

PHILIP M. CRANE, Illinois 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

AMO HOUGHTON, New York 

WALLY HERGER, California 

JIM MCCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

JENNIFER DUNN, Washington 

MAC COLLINS, Georgia 

ROB PORTMAN, Ohio 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

SCOTT MCINNIS, Colorado 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

ROBERT T. MATSUI, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MAX SANDLIN, Texas 

STEPHANIE TUBBS JONES, Ohio 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

(III)

MEMBERS OF THE DELEGATION 

MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES

Hon. Bill Thomas, Chairman, Committee on Ways and Means 

Hon. Jim Nussle, Chairman, Committee on the Budget 

Hon. Edward Royce, Chairman, Subcommittee on Africa, Committee on International Relations 

Hon. Phil English 

Hon. Jim McDermott 

COMMITTEE ON WAYS AND MEANS

Allison Giles, Chief of Staff 

Bob Winters, Special Counsel 

SUBCOMMITTEE ON TRADE

Angela Ellard, Staff Director and Counsel 

Meredith Broadbent, Professional Staff 

David Kavanaugh, Professional Staff 

OTHER

Tom Sheehy, Staff Director, Subcommittee on Africa, Committee on International Relations 

John Veroneau, Assistant United States Trade Representative for Legislative 

Affairs 

(V)

C O N T E N T S 

Page 

Members of the Delegation ..................................................................................... III 

Outline of Trip Conclusions .................................................................................... 1

Discussion of Trip Meetings .................................................................................... 4

Cape Verde ........................................................................................................ 4

Namibia ............................................................................................................. 5

Madagascar ....................................................................................................... 9

Mauritius ........................................................................................................... 11

South Africa ...................................................................................................... 26

(1)

OUTLINE OF TRIP CONCLUSIONS 

Namibia, Madagascar, Mauritius, South Africa, and African 

Growth and Opportunity Act (AGOA) Forum and Ministerial 

Success of the African Growth and Opportunity Act 

• Expanded trade through AGOA has done more to improve fundamental economic conditions within Africa than aid. Many jobs 

have been created, allowing employees to support themselves and 

their families. 

• AGOA has been successful, particularly in the apparel sector. 

U.S. imports under AGOA approach close to half of the value of all 

U.S. imports from the region. 

• AGOA has been positively received and most countries have 

sought to take advantage of the opportunities. Some countries, like 

Nigeria, are far behind; Nigeria hopes to soon pass transshipment 

implementing legislation finally making it eligible for the apparel 

provisions. Others, like Mauritius, are far ahead and seek cheaper 

labor in countries like Madagascar. 

• The AGOA legislation marked the first time ever that the U.S. 

Congress has granted preferential benefits to apparel from developing countries. The legislation was groundbreaking as well—no 

other country has provided deeper unilateral cuts for products that 

matter to Africa. 

• African countries should seek to move beyond textiles and apparel. For example, Mauritius is seeking to develop an information 

technology sector. 

Economic and Political Conditions 

• Africa has tremendous contrasts. Even the wealthiest countries, such as South Africa, have two economies. The huge disparity 

between rich and poor and between black and white creates political and economic instability. • Political destabilization in the region could erode investor confidence. For example, the deteriorating situation in Zimbabwe has 

repercussions throughout the region, as other African countries 

refuse to step in. At the same time, Madagascar’s success in continuing to attract investment after political unrest following its 

election last year is a positive and hopeful sign. 

Possible Extension and Expansion of AGOA 

• The delegation strongly supports President Bush’s statement 

that AGOA should be extended beyond 2008. Even though that 

deadline is far away, early renewal would boost investor confidence 

and assist them in making firm decisions. 

• The expiration of the third country apparel benefits for the 

least developed countries in 2004 was the issue most discussed during the delegation’s visit. 

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• Chairman Thomas described AGOA I as an ‘‘act of faith,’’ 

meaning that the need for additional benefits will have to be proven to many Members because of their controversy. Many Members 

may look at Africa’s record in supporting U.S. positions in such 

fora as the World Trade Organization (WTO) in determining 

whether to continue or expand benefits. 

• The best approach on third country fabrics is one of balance—

i.e., providing incentives in the cut-and-sew area to bootstrap Africa into more value-added fabric production by creating a solid 

workforce and infrastructure and then transferring those skills to 

high-end production, as is occurring in Mauritius and Lesotho. 

• However, the development has been slow. Lesotho, for example, which hopes to have a textile factory on line in 2004 which is 

to supply 80 to 100% of the country’s fabric needs, asked the delegation to extend the third country eligibility deadline so that it 

could assure infrastructure investors. 

• It is important to encourage African countries to integrate regionally so that if some African countries cannot produce sufficient 

fabric for their cut-and-sew needs, they will purchase from other 

African countries and not from third countries. This is the best way 

to make Africa competitive in a post-quota world in 2005. However, 

it does not appear that any African country is yet ready, or will be 

ready by 2004, to fulfill this need. 

• Use of regional instead of third country fabric maximizes the 

opportunity for U.S. raw material producers to supply Africa. 

African Competition When Apparel Quotas are Eliminated 

• When quotas are eliminated in 2005, Africa wants to be in the 

best position possible to compete with China. If an African fabric 

industry has not taken root, Africa has little hope of competing. 

China’s vastness means it could easily overpower the market in 

2005 when quotas are eliminated. 

• Africa should be encouraged to develop particular niches so 

that it can compete with China, such as high-end products. The 

delegation also agreed to approach Customs on behalf of Nigeria to 

request that hand-loomed traditional fabric be extended benefits 

upon export to the United States under provisions already in the 

legislation. 

• Africa has some advantages over China. For example, many of 

the industry representatives that the delegation spoke to mentioned that China’s worker rights compliance rates are quite low 

compared to Africa, making Africa more attractive as a source. 

U.S. Partnerships

• The United States produces some of the best inputs in the 

world. AGOA has paved the way in establishing a structure that 

rewards the use of U.S. or African inputs. U.S. cotton and U.S. 

yarn stand to be huge beneficiaries of the AGOA legislation. 

• The delegation plans to explore opportunities for increasing 

U.S. partnerships in the region. One possibility is to seek funding 

through the Trade and Development Agency for a ‘‘reverse mission’’ 

in which African cotton and yarn purchasers travel to the United 

States to meet with potential U.S. suppliers. 

3

HIV/AIDS 

• In some African countries, this epidemic is killing one out of 

every four or five people, creating tremendous political and economic costs which may affect investment decisions. 

• There seems to be government awareness and recognition of 

the problem in Africa, even in countries where there had been initial resistance, such as South Africa. In touring a clinic specializing 

in the care of pregnant HIV-positive women, the delegation was 

gratified to see how much progress has been made although still 

aware of the enormous challenges ahead. 

• Africa needs continued U.S. financial and technical assistance 

to combat this epidemic. 

• As much as an access to medicines issue, HIV/AIDS is an education and awareness problem. Prevention is key. 

• In the WTO, Ministers should commit to not bring cases 

against poor countries utilizing compulsory licensing to obtain 

drugs to fight epidemics such as AIDS. At the same time, the 

United States Trade Representative (USTR) should seek a solution 

in the WTO that allows that only the least developed of countries 

to have this access, and drugs covered should only be those used 

to fight epidemics. Otherwise, abuse will lead to collapse of intellectual property rights. 

Southern Africa Customs Union 

• The Southern Africa Customs Union (SACU) provides an enormous opportunity to deepen and make permanent the benefits of 

AGOA while giving the United States access to the often protected 

markets of the SACU countries, particularly in the areas of services, intellectual property, investment rights, and industrial tariffs. 

Such a trade agreement would mature the relationship between Africa and the United States. 

• Such an agreement should be more comprehensive than a 

SACU agreement with Europe, thus providing strong U.S./Africa 

ties covering substantially all goods and services. An agreement 

would deepen U.S. economic and political ties to the region, lend 

momentum to U.S. development efforts, encourage greater U.S. investment, and promote regional integration and economic growth. 

• At the same time, there is a tremendous variation in the 

economies of the five countries (South Africa, Namibia, Botswana, 

Lesotho, and Swaziland), complicating a negotiation. 

Conflict Diamonds 

• The United States should pass legislation as quickly as possible to put us in compliance with its WTO and Kimberley Process 

obligations. 

Africa and the WTO 

• Many Members may tie increased access under AGOA to a 

willingness by Africa to work with the United States in other fora, 

such as the WTO. 

• The European Union (EU) has taken advantage of the traditional links between Africa and the EU to press Africa to support 

its agenda in the WTO against the United States in such important 

4

areas as genetically modified organisms, geographical indicators, 

agriculture subsidies negotiations, and industrial tariff reductions. 

• Particularly in the area of genetically modified organism 

(GMO) corn, where the EU is exerting subtle but heavy pressure 

on the African countries to reject biotech corn, the EU’s self-serving 

stance harms the African countries whose people are starving. At 

the same time, Europe’s position does great damage to the biotech 

industry by fueling groundless fears that such products are unsafe 

and unhealthy. 

• The U.S. goal to eliminate agricultural subsidies should be 

viewed positively in Africa because it would eliminate the distortions that subsidies create. 

• In addition, the U.S. position on the elimination of non-agricultural market access (i.e., industrial tariffs) should be seen as a 

means to increase access of African products into the U.S. market. 

At the same time, the United States should continue to work with 

these countries to determine whether their tax structure should be 

adjusted because they depend on customs duties for revenue. 

• African countries should be encouraged to make sanitary and 

phytosanitary decisions on the basis of sound science. 

Technical Assistance 

• African countries need continued technical assistance to establish viable economic capacity, a well-grounded rule of law in the 

continent, and efficient government practices. 

DISCUSSION OF TRIP MEETINGS 

CAPE VERDE

Country Briefing With Ambassador Johnson 

During a refueling stop in Cape Verde, Members were briefed on 

economic and political conditions on the islands by U.S. Ambassador Johnson. 

Cape Verde is a series of ten islands off the coast of Africa. The 

climate is much like the Sahara Desert. Tourism is a substantial 

source of economic activity with major traffic flows coming from 

Europe. Historically, the islands have been one of the world’s top 

producers of sea salt used to preserve catches in the fishing trade. 

Per capita income is approximately $1,300 per year. Expatriate 

Cape Verdeans, many living and working in the U.S., are a significant source of funds for the economy. 

With regard to energy, the country depends largely on oil from 

Angola. Energy production varies island by island. Access to potable water is also an issue that the nation will face as it seeks economic growth. 

The country is building exports under AGOA but also depends on 

international food aid and other forms of assistance. Portugal provides a substantial amount of aid. The Ambassador reported that 

the United States is providing Cape Verde with technical assistance in Cape Verde’s bid to join the WTO. The country can produce 

wine, tuna and coffee, among other products, but appears unlikely 

to achieve self-sufficiency in agriculture. 

5

Politically, the country has a democratic orientation. The last two 

elections have been peaceful, and although the most recent election 

was decided by twelve votes, the transition between governments 

was peaceful. 

NAMIBIA 

Namibia has a population of 1.74 million people and a gross do- mestic product of $4.2 billion growing at 3.9% per year. Namibia 

receives $178 million in foreign assistance including $7 million 

from the United States. The literacy rate is 81%, and due to former 

South African administration there is high quality infrastructure in 

place including roads and electricity distribution. Diamonds, base 

metals (zinc and copper), and white fish were Namibia’s leading exports. U.S. exports to Namibia of $249 million consisted primarily 

of vehicles and parts. Namibia’s exports to the United States annually total $38 million and consist largely of copper, fish and ocean 

products. Namibia has recently modernized its port at Walvis Bay 

and added major roadways, providing access to Johannesburg, 

South Africa, Zambia, and Zimbabwe. 

Namibia is a newly independent country having been ruled for 

decades by South Africa, which applied apartheid policies toward 

the population. As such, land reform is a major issue since white 

Namibians are the predominant landowners; however, Namibia is 

adhering to the rule of law as it addresses this distribution issue. 

The economy has historically been built on mineral extraction such 

as diamonds, zinc, and copper. Namibia is expanding into fostering 

tourism, agriculture, and value-added hydrocarbon production. 

AGOA has already had a major impact on the economy by attracting manufacturing jobs. Namibian officials are enthusiastic about 

a U.S.–SACU Free Trade Agreement. 

Country Team Briefing With Ambassador Kevin McGuire, 

Windhoek and Etosha National Park, Namibia 

Ambassador McGuire and his team provided the delegation with 

a briefing on the political, economic, health, and wildlife conservation issues of Namibia with special attention paid to trade and the 

effects of the AGOA legislation. The Ambassador opened by noting 

the positive political atmosphere in Namibia and how the government wanted to use market-oriented policies to develop the country. This is remarkable given that many of Namibia’s leaders once 

professed revolutionary and Marxist policies, but embassy staff 

maintain that a ‘‘real conversion’’ has occurred. Namibia has high 

indices on education and low levels of corruption. Like many newly 

independent African nations, Namibia is still dominated by revolutionary leaders of the ‘‘old guard,’’ but Namibia has a solid constitution and legitimate emerging opposition parties. The United 

States provides assistance to Namibia through U.S. Agency for 

International Development (USAID) to advance democracy building. On the issue of terrorism, the Ambassador complimented Namibian officials on understanding the issue and being willing to 

help fight terrorism. 

The Ambassador noted that the new Ramatex factory brought 

$200 million of foreign direct investment into the country from Malaysian investors and created 4,200 badly needed jobs. More textile/

6

apparel investors (Taiwah Manufacturing and Rhino Manufacturing) are expected, soon adding $115 million in investment and 

6,000 additional jobs—all directly attributable to AGOA. Within 

three years of AGOA, the three companies expect to hire 10,000 

employees and export $120 million per year in products. The Ambassador noted that AGOA II gave Namibia Least Developed Country status for purposes of allowing Namibia freer use of non-regional fabric in its U.S. exports. This was justified because of the 

skewed per capita earnings in Namibia whereby most Namibians 

by which the few wealthier residents skew the statistics upward 

despite the fact that most Namibians are very poor. 

The embassy team also described the devastating impact of HIV/

AIDS on Namibia. There is a 23.3% infection rate for pregnant 

women, and 230,000 Namibians are currently infected with the 

HIV/AIDS virus. By 2010, 20% of the country’s gross domestic 

product (GDP) will be devoted to health care. By 2020 there is a 

projected loss of 35% of the workforce. There are now 82,000 orphans, which will increase to 120,000 in three years. Namibia has 

one of the highest tuberculosis rates at 640 per 100,000 persons. 

According to the Center for Disease Control (CDC) Officer, Namibia 

initially suffered because of the passive or unhelpful attitude toward HIV/AIDS of the South African government. Today the newly 

independent Namibian government is very active in recognizing the 

AIDS epidemic and working with the United States to fight against 

it. The 81 Peace Corps members in Namibia help to educate 

Namibians on AIDS. The CDC Officer has an office at the Namibian Ministry of Health and works closely with Namibian officials.

The CDC Officer addressed the question of AIDS drugs. He said 

that drugs and therapy are only part of the solution ‘‘but not the 

solution.’’ A lot of work must be done on prevention and education. 

AIDS drugs require very precise and continuous administering. The 

challenge is that with so many infected people, it is difficult to 

treat all of them. The government expects to be able to treat about 

1,000 people without substantial foreign assistance. With assistance, Namibia can treat 40,000 over five years. Many Namibians 

are unaware that they are infected with the HIV/AIDS virus. The 

United States has played a key role in providing voluntary testing 

facilities and giving counseling. The Officer emphasized that counseling is often as important as treatment because people must recognize the behavior that leads to infection and must come to terms 

with the social pressures related to AIDS and sexual behavior. 

One strong foundation to begin with is the mother-child transmission program, which the United States began a few years ago 

and which Namibia is poised to pick up. Namibia also wants to 

begin an aggressive tuberculosis treatment program since AIDS 

threatens to reactivate latent tuberculosis bacteria that have otherwise been under control. In the opinion of the CDC Officer, the 

AIDS epidemic could lead to a tuberculosis epidemic. The USAID 

Officer described the education efforts to explain AIDS through 

radio and television. Community-based groups are now providing 

education in local languages. The Ambassador remarked that the 

U.S. Department of Defense (DoD) has also contributed to this effort in cooperation with the Namibian military, which also faces 

7

heavy infection rates. DoD has a multipurpose clinic in Walvis Bay, 

Namibia which is staffed in part by Peace Corp volunteers. Abbot 

Labs has offered to donate the tests for mother-child transmission, 

which cost $2 each. 

Embassy staff also briefed the delegation on wildlife conservation 

in Namibia, which has a reputation for effective and responsible 

conservation efforts as the delegation noted in the Etosha National 

Park. For example, the Convention on International Trade in Endangered Species (CITES) Secretariat that oversees the Agreement 

permitted Namibia the extraordinary act of selling 10,000 tons of 

ivory on the world market because of Namibia’s excellent efforts to 

protect wild elephants. Normally the sale of ivory is strictly prohibited. The Namibian ivory was gathered as a result of culling activities when the population grew too large for the area and for natural resources to sustain. 

Chairman Thomas made the point that the current intellectual 

property debate in the WTO is far too narrowly focused. It detracts 

from the wider issues of healthcare and prevention programs that 

are important. Also, the epidemic will have severe consequences for 

the economies in Africa as large portions of the population die, 

leaving orphans and widows that must be cared for. Moreover, 

there are social implications for so many orphans being raised 

without parents. 

Chairman Thomas and the delegation noted that it is important 

that Members of Congress see the programs they vote for. A relatively small appropriations of $1 million can make a very large 

difference in countries like Namibia. 

Chairman Royce asked what USAID projects should be funded. 

The USAID Officer replied that the United States seeks stronger 

democratization in Namibia since it is now dominated by the revolutionary party SWAPO, South West African Peoples Organization. 

Currently the democratization funding is at zero but in the past 

there have been effective education programs in conjunction with 

the non-governmental organizations on advocacy skills. Most important, ‘‘we do not want a chain reaction as in Zimbabwe,’’ meaning that effective institution building and respect for rule of law 

principles can help Namibia work through its domestic issues fairly 

and without destabilizing effects. 

Chairman Thomas asked what could be gleaned from the trip 

that could be useful in attracting support for the SACU Free Trade 

Agreement. The Political Officer confessed that U.S. interest is 

small given the small economy and trade relationship with Namibia alone. U.S. companies are unlikely to be able to crack the 

public owned utility sectors. They have been commercialized but 

the government provides money as needed because the sectors employ so many people. There is potential for U.S. exports in agriculture and pre-cut housing (given the shortage of houses). Some 

U.S. companies like Oakwood Homes have experimented with 

houses that are shipping container shaped, i.e., the walls of the 

container become the walls of the house, and the fixtures are inside. 

Cotton grown in Namibia, where there is far more water than in 

the southern Kalahari desert region, is exported raw although 

more is expected to be used domestically with the new textile/apVerDate Jan 31 2003 04:22 Mar 26, 2003 Jkt 085734 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\C734A.XXX C734A
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parel plants. Notably, the U.S. Cotton Council is visiting Namibia 

shortly because of interest in supplying the new textile plants. Namibia views the Free Trade Agreement (FTA) as a way to lock-in 

the AGOA benefits which will otherwise expire. Even before AGOA 

II provides more benefits to Namibia, the Namibian leadership recognized the benefits of diversifying the economy into value-added 

industry. For example, they are now trying to cut and polish diamonds rather than simply mine and export diamonds in their raw 

form. They rightly view this diversification as a way to develop the 

skills of their workforce. 

Chairman Nussle asked about the Namibian’s views on GMOs. 

The Political Officer replied that Namibia has not been involved 

but is not opposed to GMOs. The only concern has been whether 

their use will impact exports to the EU, especially beef. Namibia 

buys white maize from the United States and also non-GMO corn 

and wheat. Capacity building assistance on the GMO issue would 

be helpful. Given the shortage of corn regionally, there have been 

some South African farmers who are planting GMO corn. 

The delegation took a ‘‘windshield tour’’ of Windhoek and observed the German influence on the architecture and also the clean 

and well-maintained streets and shopping areas. However, the lack 

of water and thus vegetation gave the landscape and residential 

areas a barren look. The delegation passed through the poorer 

areas of town which showed clean, well-kept, pre-built houses often 

with televisions visible inside. The delegation noted that virtually 

all of the houses had some form of wall or fence often topped with 

barbed or razor wiring because of the high crime rate. 

Visit to Ramatex textile and apparel factory, Windhoek, Namibia 

Ramatex Namibia is a subsidiary of Ramatex Berhad of Malaysia. The Namibian factory broke ground in August 2001 and is a 

fully integrated textile and garment manufacturing plant, currently 

employing 4,200 Namibians. Current exports go only to U.S. buyers 

including Sears, K-mart, and Target. Since beginning production in 

June 2002, exports total $11.5 million. The delegation was shown 

the manufacturing process and noted the 5–10 year old German 

built equipment used throughout the plant. There were a few, 

newer, Taiwan-built yarn spinners in use at the plant. Also notable 

was the relative lack of ergonomic seating for sewing, which contrasted with other plants visited on the trip. For example, worker 

seats were bare, narrow, wooden stools with no staging area for 

managing inputs and outputs at the work station. Nevertheless, 

the work area was clean and uncluttered. The delegation noted fire 

escape routes marked on the floor and other safety features such 

as worker ear plugs and masks. Workers typically work 9 hour 

days, 5 days a week, and workers receive overtime for work on Saturday. Pay is 27 Rand per day minimum with an added piece-rate 

bonus incentive. Workers bring their own food. 

One problem encountered by this factory is the lack of transportation out of the factory and to the port. Trains and roads are a 

bottleneck for production. As with all aspects of the trip, HIV/AIDS 

casts a pall over the economic potential of the country given the 

9

projected loss of 35% of the workforce by 2020 and 20% of the GDP 

devoted to health care expenses by 2010. 

Working Lunch, Windhoek, Namibia 

Foreign Minister Hamutenya hosted the delegation with Trade 

Minister Nyamu and Finance Minister Mbumba. The Ministers 

stressed their appreciation for the support that the United States 

is providing to improve relations with Namibia. The Ministers also 

viewed AGOA and a potential U.S.-South African Customs Union 

FTA very positively and made clear that Namibia intends to use 

market principles as a means to promote development of the economy and its human resources. Congressman McDermott took advantage of the opportunity to promote the interests of Boeing in 

providing a solution to Air Namibia’s fleet restructuring needs. The 

delegation’s visit and goals were positively reflected in the press. 

MADAGASCAR 

En route to the AGOA Forum in Mauritius, the Delegation made 

a brief overnight stop in Madagascar. The focus of the visit was a 

January 13 tour of the COTONA vertically integrated textile and 

apparel facility in the highland industrial city of Antsirabe, a thirty 

minute flight by small plane from the capital. COTONA is one of 

the most modern fabric and apparel factories in sub-Saharan Africa. 

Visit to COTONA textile and apparel factory opening, 

Antsirabe, Madagascar 

The delegation joined President Ravalomanana in participating 

in the ceremonial opening (at the COTONA (French acronym for 

cotton mill of Antsirabe) industrial site) of the Cottonline apparel 

plant in which a U.S. firm, Brandot Holdings, is a 25 percent joint 

venture partner. Stressing the theme ‘‘AGOA—Making a Difference 

in Africa,’’ the factory partners and President Ravalomanana 

thanked the ‘‘godfathers of AGOA’’ for the framework that led to 

$40 million in investment and 3,000 new jobs at the site being visited. They cited AGOA as a catalyst for investment in new and upgraded facilities and a vehicle for improving the lives of thousands 

of Malagasy. 

The COTONA Complex was originally established by a Madagascar-based family firm (Groupe Socota) in the 1950s. COTONA 

developed into one of Madagascar’s two major cotton fabric mills. 

The founders chose Antsirabe because of its central location and 

good transport connections, and the plant’s production focused on 

the domestic Malagasy market for 40 years. In the 1990s, imports 

of cheap Asian fabrics and used clothes forced COTONA to re-engineer itself in a strategic shift. COTONA turned up-market, adding 

more sophisticated equipment and targeting export markets 

through apparel firms in the Export Processing Zone (EPZ) established in 1990. 

COTONA supplemented its sales of fabric to EPZ firms by building its own apparel factory on the Antsirabe site—Columbia Clothing Company. Commercial production at Columbia started in 2001 

and now the firm employs 1,500 employees in two daily shifts. Opportunities under the AGOA legislation led to further equipment 

10

upgrades and the construction of an entirely new apparel factory, 

Cottonline. High capital costs and the desire to transfer and share 

expertise led to a four-way joint venture arrangement for the 

Cottonline factory. Equal joint venture partners are: the Madagascar firm Groupe Socota, the U.S. firm Brandot Holdings Ltd., 

and two Sri Lankan firms (MAST Holdings and Phoenix Ventures 

Ltd.). A large U.S. apparel buyer and distributor, MAS Industries, 

and its founder, Martin Trust, have been key in the development 

of purchases by the U.S. firm Limited Brands from COTONA. The 

two Sri Lankan firms had worked with Limited Brands and MAS 

Industries for more than a decade prior to the Cottonline project. 

The delegation toured the COTONA integrated fabric mills, 

which transform cotton fiber grown in northwestern and southwestern Madagascar into cotton fabric. The facility uses 100 percent Malagasy cotton (4,500 tons per year of California Acala and 

Israeli Pima types) grown on Groupe Socota lands or purchased 

from other local producers. The building encompasses 1 million 

square feet, on a 3 million square foot site. The CODEL viewed the 

spinning, weaving and finishing processes, the latter including 

bleaching, dyeing, and printing. Spinning operations include 23,000 

spindles and several hundred high-speed cone-winding spindles. 

Annual yarn production is substantial: 2,500 tons of open-end yarn, 

1,200 tons of combed yarn, and 800 tons of carded yarn. High-speed 

weaving involves the latest generation of air-jet looms and dyeing, 

and printing and finishing equipment is state-of-the-art and all installed in 2000 or later. 

The COTONA fabric mills produce 22.5 million SMEs (square 

meter equivalents) per year. Principal U.S. customers include Limited Brands, Levi’s-Dockers, and Gap, Inc. The delegation also 

toured the adjacent Columbia Clothing Company apparel facility, 

which was running an order for Express, a Limited Brands affiliate. 

The Cottonline plant represents new investment of $9 million 

and covers 112,000 square feet. It runs in double shifts, with 1000 

sewing operators producing both knit and woven garments on 500 

machines. Chairman Thomas commented positively on the quality 

of the lighting and work environment, noting that both the sewing 

machines stands and workers’ chairs were ergonomically sensitive. 

Initial products at Cottonline are knit tops for women and boxer 

shorts for men, with capacity to produce a full range of underwear, 

sleepwear and casual wear for men, women, and children. 

In the ceremonial opening, President Ravalomanana cut the ribbon to open the new Cottonline plant and heard the employees of 

the new facility sing the Malagasy national anthem on a factory 

floor decorated with U.S. and Malagasy flags. He and the factory 

partners spoke briefly before the delegation and invited guests. The 

President delivered his remarks entirely in English (then in Malagasy) emphasizing his business background and understanding 

that private sector investment must drive economic growth and development in Madagascar. 

In his speech and in a meeting with the delegation, 

Ravalomanana emphasized that Madagascar has re-opened for 

business after the recent political crisis and that he is committed 

to making his country ‘‘number one’’ in the African region. The 

11

joint venture partners stressed the 21st century technology, sharing of expertise and commitment to maintain and expand the facility at a world-class level. Chairman Thomas said that he viewed 

AGOA as the ‘‘Africa GO Act’’ and that export-led growth as exemplified by the fiber-to-garment operations in Antsirabe was just the 

sort of development the drafters intended. 

President Ravalomanana’s presence at the factory, whose working conditions were exemplary, signaled that AGOA has made a 

difference in Madagascar that its leadership, and the private sector, wants to see continue. 

MAURITIUS 

Country Briefing With Ambassador Price and Deputy Chief 

of Mission Bisa Williams, Port Louis, South Africa 

Mauritius is an ethnically and religiously diverse society. The official language is English. Socially, use of French and Creole are 

common. Per capita incomes are relatively high for the region, from 

$3,700 to $4,000/year. 

Mauritius has developed a democratic government. It is one of 

the most economically successful nations in the AGOA region. Historically dependent on sugar production, Mauritius has been very 

successful in developing a sophisticated, competitive textiles industry. The government has viewed developing a trained labor force as 

a crucial element of economic development and has, since achieving 

independence, made substantial investments in public education. 

As the government recognizes that increased costs will make it 

more difficult for Mauritius to remain competitive in textiles over 

the long term, the government is attempting to promote electronic 

commerce. Mauritian textiles companies are also examining other 

AGOA nations, particularly Madagascar, for investment opportunities. The Mauritian government has encouraged the private sector 

to make these kinds of investments. 

Mauritian businesses are increasingly entering offshore banking. 

Embassy officials noted the government has established a financial 

crimes unit and is cooperating with the United States in a number 

of areas. 

The Mauritian government identifies strongly with Africa and 

the AGOA nations. They have engaged in discussions to convey to 

other AGOA nations the techniques Mauritius used to develop its 

economy. 

Mauritius claims the islands in the chain which includes Diego 

Garcia where the United States has a substantial military presence. The Mauritian government disputes the United Kingdom’s 

claims to these islands and has made attempts to draw the United 

States into discussions of Mauritian claims of sovereignly over 

Diego Garcia. Embassy staff noted that the United States continues to take the position that the United States has a valid 

agreement with the United Kingdom allowing use of Diego Garcia 

and that the United States will not engage in discussion of Diego 

Garcia’s status with Mauritius. 

12

AGOA Trade and Investment Forum 

In Mauritius the delegation participated in the AGOA Trade and 

Investment Forum or ‘‘Government Forum’’ and in several sessions 

of the Private Sector Forum and the non-governmental organizations (NGO) Forum which met simultaneously under the aegis of 

the Government Forum. 

The Government Forum was held on the Campus of the University of Mauritius. Ministerial delegations of up to eight members 

from the thirty-eight AGOA-eligible countries took part in plenary 

and breakout sessions addressing such themes as Trade, Conditions for Investment, and Investing in People. United States government agencies participating in the Forum included the U.S. Department of State, the U.S. Trade Representative, U.S. Department 

of Commerce, U.S. Department of the Treasury, U.S. Agency for 

International Development, and the Trade Development Agency. 

Chairman Thomas joined Ambassador Zoellick, Deputy Secretary of 

Commerce Sam Bodman, and AID Administer Andrew Natsio and 

counterparts in the Government of Mauritius on the stage at the 

opening ceremony of the AGOA Forum. 

During the ceremony Ambassador Zoellick pointed out that Africa’s share of global trade has dropped from nearly 4 percent in the 

1960s to less than 2 percent today and that Africa has seen too little globalization, not too much. He urged Africans to consider how 

to compete successfully with China, India, and other apparel exporters when WTO quotas on apparel come off at the end of 2004. 

He said that Africa’s voice matters in the Doha trade negotiations 

and that he wants to work with Africans, particularly as key deadlines in the agriculture talks approach. ‘‘We also need to work together to ensure special treatment for truly needy countries—like 

those in Africa—and guard against efforts by better-off countries to 

insist on parity with Africa.’’ 

AGOA Private Sector Forum 

The parallel private sector event, the AGOA Private Sector 

Forum, was organized by the Mauritius American Chamber of 

Commerce (AmCham), the Corporate Council on Africa (CCA) and 

the African Coalition for Trade (ACT). Chairman Thomas participated in the opening panel at the AGOA Private Sector Forum that 

included Jaya Krishna Cuttaree, Minister of Industry and International Trade of Mauritius and Martin Trust, founder of MAST 

Industries and senior advisor to Limited Brands. 

In his address to the Forum, Minister Cuttaree praised the 

AGOA legislation for bringing about a significant increase in twoway trade between Africa and the United States. ‘‘The benefits of 

expanded trade for African countries have come in the shape of 

more jobs and larger national incomes through exports,’’ he said. 

‘‘These gains are all the more important as they offer the possibility for our economies to move beyond the constraints of exports 

of primary commodities and reach for higher levels of growth powered by manufactured exports as well as newly developed services. 

Economic growth in our region turns notably on foreign investment 

and technology transfers; AGOA has made a promising start in activating these flows.’’ 

13

In his remarks, Chairman Thomas said he came to Africa to analyze the effects of AGOA. Although Europe ‘‘talks a good game,’’ it 

was the United States Congress, he said, that was actually willing 

to open up unilaterally to African apparel and other products. 

AGOA II and Trade Promotion Authority passed by one vote twice 

in the House, and then by three votes on final passage of the conference report. In order to expand AGOA further, Chairman Thomas said, he will need to be able to make the case to Members of 

Congress that their votes have made a difference for Africans. The 

goal of AGOA is to encourage not only ‘‘cut and sew’’ apparel jobs, 

but also sophisticated management and marketing jobs, democratic 

reforms, and new opportunities to provide education. Chairman 

Thomas said he is looking for a closer relationship between African 

countries and the United States in the WTO. African countries and 

the United States have common interests in ensuring that science 

is the basis for sanitary and phytosanitary restrictions. Likewise, 

there should be a shared view about geographical indications, 

which are used to establish exclusive rights to trade for certain 

producers, building in an economic advantage for Europe. 

While saying Africa has a lot to be proud of in that the region 

has doubled its shipments of apparel exports to the United States 

in just two years, Martin Trust warned that China is looming as 

a huge competitor. He said the job of the apparel customer is to 

state clearly what product is wanted at what time, and the job of 

the factory is to do the rest—with no excuses. Customers, he said, 

expect: (1) acceptable quality no matter the price point; (2) competitive pricing; (3) strict compliance with legal and ethical standards; 

and (4) on time delivery. To be highly successful, the AGOA region 

needs to have a bigger and better African workforce. This will require technical education, on-the-job training, and ultimately technical schools to enhance and teach the skills needed in the textile 

and garment sector. Characterizing his message as ‘‘tough love’’ 

from an ‘‘old friend, committed supporter, and active investor,’’ Mr. 

Trust said that Africa needs to establish market share, increased 

reliability, and a solid reputation for performance right now. 

Lagesse School (Spouse Program) 

The school, which receives U.S. government support, provides 

blind and visually impaired students with life and job skills. School 

leadership explained that blindness is still stigmatized on Mauritius. Many families have historically limited education for visually 

impaired children. As a result, the school provides education in 

basic skills such as traveling alone and other functions which children will require for survival. Training in reading and other areas 

is provided as well. The school offers training in crafts as a means 

of providing job skills. Students are taught to make wicker products, including baskets and complex furniture, for retail sale. Other 

students were training for careers in therapeutic massage. 

Queen Elizabeth College (Spouse Program) 

The College is a girls’ school currently serving students in their 

teens. Training is provided in art, literature, the sciences and, increasingly, in computer skills. Students are selected through a series of competitive examinations. Because university space on MauVerDate Jan 31 2003 04:22 Mar 26, 2003 Jkt 085734 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\C734A.XXX C734A
14

ritius is limited, many of the students will seek higher education 

outside the country. The United Kingdom, France, and India are 

among the places students often seek schooling. A number of the 

students noted that they would like to study in the United States 

but that limitations imposed by U.S. immigration law made it hard 

for them to attend U.S. institutions. 

Floreal Women’s Center (Spouse Program) 

The group was introduced to the facility and its services by the 

Minister of Women’s Rights, Child Development and Family Welfare, Mrs. Marie Arianne Navarre-Marie. 

The Center provides a diverse set of educational programs intended to improve women’s economic and social standing. Programs 

ranged from home economics, nutrition, clothing production, stress 

management, handicrafts, and personal grooming to domestic violence prevention and child care. The Center’s clinic also provides 

counseling and medical services. 

Meeting With Deputy Prime Minister Berenger and Foreign 

Minister Gayan 

Under an agreement with the current prime minister, Berenger 

will become Prime Minister in the fall. 

Berenger opened the meeting by stating that Mauritius stands 

behind the United Nations and the United States in wanting Iraq 

to disarm. He explained that Mauritius has a small economy, making it vulnerable. He pointed to the special relationship that Mauritius has with the EU. He noted that the free trade agreements that 

the United States is negotiating threatens Mauritius. 

Chairman Thomas introduced the delegation, noting that it is bipartisan and represents two key Committees. He said that the 

United States has been pleased with the role that Mauritius has 

played in the Security Council and noted that the United States 

hopes that Mauritius can help find a successor that will be as conscientious. With respect to bilateral trade agreements, the Chairman said that such agreements allow the United States to make 

many friends, and he hastened to assure the Mauritian officials 

that they should not view such agreements as threatening. With 

respect to agriculture trade issues, he said that he hopes that Mauritius and the United States can stand together to assure that real 

science is utilized, both with respect to sanitary and phytosanitary 

issues as well as genetically modified organisms. He also asked for 

Mauritius’ support in the WTO on geographical indicators, so that 

quality, and not merely historical origin, is the primary issue. He 

added that the United States and Mauritius have the potential for 

a long and prosperous relationship, and uniting instead of taking 

separate positions helps each country. 

Congressman McDermott then asked the Deputy Prime Minister 

what would make a difference for Mauritius with respect to AGOA. 

Berenger replied that Mauritius has been able to exploit key provisions of unilateral preference programs offered by the United 

States and the EU. As an example, he mentioned the EU sugar 

policy, which gives Mauritius access to the EU at three to four 

times the world price. As for textiles, he noted that Mauritius has 

benefitted from its relationship to the European Union, noting that 

15

Mauritius has to look out for itself. On Madagascar, he said that 

he thinks things are moving in the right direction after the troubled election last year, and Mauritius is trying to get the African 

Union to accept Madagascar as a full Member. 

Foreign Minister Gayan stated that AGOA is very young and has 

just begun. He said that Mauritians have a distorted understanding of the United States. Oil has historically been the major 

driving force for U.S. investment in Africa, but Africa can do other 

things. Decision-making in the United States, however, is complex 

because of its lobbying culture, and it is important to develop 

mechanisms for dealing with Congress directly to help Mauritians 

understand how to interact better. 

Gayan brought up the relationship between HIV/AIDS and the 

WTO, noting that there was an opportunity in the WTO to deal 

with this issue, but the United States did not go along with other 

countries. The issue is of grave concern, and Gayan asked the 

Members to explain the U.S. position. Galan then concluded by 

saying that there is a tendency to lump Africa into a single bloc, 

which does disservice to the notion of cooperation. He also noted 

that an opportunity to press Zimbabwe on land reform is being 

missed. 

Chairman Thomas responded to all of these comments, noting 

that Europe provides Mauritius with narrow opportunities so that 

‘‘if Mauritius is tied to history, it will be left behind by history.’’ 

He answered the question on AIDS by saying that the United 

States has determined not to use WTO dispute settlement against 

an African country imposing compulsory licensing for an epidemic 

such as AIDS, but the United States believes this flexibility should 

not be used as an opportunity to ignore international law. On 

Zimbabwe, he stated that the delegation was greatly concerned 

about Mugabe’s land policy, noting that perhaps the reaction in Africa has been tempered by its historical relationship with South Africa. He suggested that if the dispute is dealt with in a concerted 

way, Africa would be seen as maturing. 

Congressman McDermott mentioned that many former 

Mauritians are affected by the Zimbabwe land policy and that the 

United States and Mauritius should ‘‘double team.’’ The problem is 

related to colonization in general, and countries other than 

Zimbabwe, such as Namibia, are experiencing a similar problem. 

The Deputy Prime Minister said that Mauritius takes a broad 

view on the Zimbabwe question. It is wrong to attack Zimbabwe 

solely on the land issue; instead the issue is one of rule of law, democracy, and human rights. He noted that Mauritius recently prevented Zimbabwe from taking a leadership role in an international 

organization, which was seen as a strong signal. He then pointed 

to other countries in the region, noting that Angola and the Congo 

have progressed from civil war. Cote d’Ivoire, on the other hand, 

‘‘breaks our hearts.’’ 

He responded to the Chairman’s question on geographical indicators by stating that it is not a big issue for Mauritius. He said he 

could not remember where Mauritius is on the issue but that Mauritius wants to be fair and open-minded. The Chairman responded 

by stating that the United States is looking for friends to help on 

such issues. He noted that the United States has opened its market 

16

to Africa despite political cost and hopes to work with Africa to 

overcome other differences. Congressman McDermott noted that 

the Mauritius Ambassador to the United States has been particularly effective in working with members of Congress. Chairman 

Thomas added that passage of the original AGOA bill was an ‘‘act 

of faith’’ for many Members, and he must continue to show Members that they made the right decision. 

Minister Gayan stated that it is very difficult to have an AGOA 

of indefinite duration. Africa needs a longer time span for investors 

to recoup their investments. Chairman Thomas said that he hopes 

that Africa can bootstrap and build upon the benefits in AGOA, 

particularly the third country fabric benefit for the least developed 

countries. If the third country provision is open-ended, only cutand-sew operation will continue to develop. The AGOA dates are 

not termination dates, he said, but opportunities for monitoring 

progress. He added that he needs information to show Congress the 

progress that Africa is making on indigenous fabric production. He 

concluded that his preference is for short-term third country fabric, 

noting that an opening for all as part of a broader agreement is the 

better approach. 

Congressman McDermott noted that Chairman Thomas acted 

quickly to move AGOA II, and he cannot imagine that the Chairman would ‘‘abandon’’ Africa. 

Berenger concluded by saying that Africa needs funding for education and reform. He mentioned that Mauritius is trying to develop an information technology sector. He quoted Ghandi, who 

called Mauritius a ‘‘great little country,’’ noting Mauritius is improving all the time. 

AGOA Civil Society Forum 

Chairman Thomas began by noting that as its success was far 

from certain, passing AGOA was an ‘‘act of faith’’ by the Congress, 

but the idea of ‘‘doing nothing for Africa wasn’t working.’’ He reported that in the ‘‘political bargain’’ to pass AGOA, other regions 

of the world had to suffer a loss of U.S. market share. He also emphasized the importance of technology transfer in textile investment in Africa; Congressional intent was not for the continent to 

‘‘get a few years of cut and sew’’ out of AGOA. 

Chairman Thomas expressed hope that AGOA would encourage 

increased democracy and transparency, which would help the 

AGOA program receive continued support in Congress. He told the 

group he is looking for the opportunity to tell colleagues that positive results come from the increased market access that AGOA 

granted. He emphasized the sensitivity of the textile industry in 

the United States and said that many people were willing to give 

lip service to helping Africa, but when it came to granting greater 

market access to African goods, much of that support fell away. He 

concluded that Congress ‘‘would continue to write [trade] legislation’’ on Africa. 

Congressman McDermott reported that the United States needed 

a trade policy, but also an economic development policy for Africa, 

including an HIV/AIDS policy. He expressed hope that the United 

States would do a good job balancing these policies. 

17

Congressman English reported that as chairman of the steel caucus in Congress, he took an ‘‘eclectic approach’’ to trade. As an 

original co-sponsor of AGOA, he was interested in labor and environmental standards, being concerned about avoiding a ‘‘race to the 

bottom.’’ He also noted that he was ‘‘here to listen.’’ 

Chairman Nussle said that he is a newcomer to the issue and 

had supported AGOA ‘‘out of faith.’’ In supporting AGOA, he had 

an interest in moving away from aid to trade. He also noted that 

he is mindful of agriculture and is constantly looking to expand opportunities for U.S. agriculture abroad. He also emphasized that he 

was ‘‘here to listen.’’ 

Congressman Royce stressed that AGOA was the United States’’ 

effort to combat Africa’s economic marginalization: ‘‘something had 

to be done to give African investment a boost.’’ He noted that 

AGOA results-to-date were encouraging and reported that it would 

be desirable to move toward free trade agreements with African 

countries. FTAs would make AGOA benefits permanent. He discussed how AGOA, through its eligibility requirements, created leverage for economic reform in African countries. 

When asked about greater engagement with Africa, Chairman 

Thomas noted that AGOA II legislation cleared away the dispute 

over the duty treatment of merino wool apparel items and increased the caps on apparel imports. Congress took this action because it wanted people to know that it was concerned about Africa. 

When asked about eligibility criteria, Rep. McDermott noted that 

non-governmental organization’s could provide a valuable set of 

eyes and ears in the community as to whether countries were abiding by the AGOA criteria. He stressed that he was interested in 

hearing from NGOs. 

Chairman Thomas was asked whether trade benefitted the ‘‘common man,’’ to which he responded that the goal of AGOA was to 

maximize employment. If there are excessive demands about employment conditions, investors would be deterred from African 

countries. He noted that employment conditions in Madagascar textile plants the delegation visited are quite high. He emphasized 

that the goal was not to generate short-lived ‘‘cut and sew operations’’ in Africa. Congressman McDermott noted that some countries would be able to take advantage of AGOA, but others would 

not—and this competition among African countries was beneficial. 

When questioned about sanitary and phytosanitary standards, 

Chairman Thomas noted that the United States is making many 

technical efforts to help developing countries meet U.S. standards. 

He stressed that the WTO and others needed to ‘‘get serious’’ about 

standards. He also noted that the state of California spent a considerable amount countering non-indigenous pests. For Africans 

seeking to export agricultural products, meeting these standards 

would be a major but fruitful investment. He stressed that the 

United States is not willing to compromise its food safety standards. Africa should strive to raise its standards, not lower U.S. 

standards. Congressman McDermott spoke about the importance of 

protecting the food supply. He noted that the U.S. intent is not to 

keep African products out but to raise health standards. 

18

Chairman Thomas responded to questions about GMOs by emphasizing that the goal was ‘‘to minimize the propaganda and bad 

science.’’ 

When asked whether foreign policy considerations affected AGOA 

eligibility, Chairman Thomas noted that there is a tension in the 

U.S. system between the Congress and the executive branch, which 

does see trade as part of its broad political agenda, but that this 

was a healthy tension. He warned that Congress would not accede 

to the granting of market access under AGOA or any trade agreement if it is not consistent with the eligiblity criteria in legislation. 

Chairman Thomas noted that both bilateral and multilateral approaches to trade, when used simultaneously, are complementary, 

noting that ‘‘collectively you can do a better job if individually you 

are improving.’’ 

When asked about HIV/AIDS, Chairman Thomas said that it is 

completely unacceptable that infection rates in some African countries are in the 33 percent range. It is a problem of ‘‘politics, economics, and logistics.’’ The United States has agreed, he noted, not 

to bring nations to dispute resolution if they are addressing HIV/

AIDS. Congressman McDermott emphasized the importance of African political leadership to combat the epidemic—‘‘political capital 

must be spent.’’ He also noted that in education efforts, ‘‘the message must be delivered in the language that people make love in.’’ 

He said that relaxing patent standards alone wouldn’t be sufficient. 

The Lesotho labor organizer raised the issue of labor standards, 

and Congressman Thomas recognized that it is a challenging issue. 

He warned that U.S. companies could not be expected to invest in 

a developing country with an undeveloped workforce and abide by 

U.S. labor standards. That standard would result in no investment—‘‘Standards are essential, but standards that would stop the 

process [of investment in the developing world] make no sense 

whatsoever. What we are doing is called a start.’’ The first goal is 

to get countries to abide by their own laws. Congressman English 

stressed the importance of labor standards. He asked organizations 

to submit labor concerns to his congressional office. He noted that 

the labor standards issue ‘‘is a work in progress.’’ Congressman 

McDermott seconded the importance of NGOs contacting Congress.

Congressman McDermott responded to a question on development aid by emphasizing that aid needs to augment trade and that 

the United States should coordinate the two. 

Meeting With Nigerian Trade Minister Precious Ngelale, 

Mauritius 

The Nigerian Trade Minister has only recently assumed his post. 

He opened the meeting by saying that AGOA has provided important access to the U.S. market, giving Africa a competitive advantage that is so important because many countries are ahead and 

Africa faces many impediments. Nigeria intends to convene shortly 

a stakeholders’ forum in order to sensitize Nigerians to the opportunities that AGOA provides. He said that Nigeria needs capacity 

assistance to develop the expertise to help utilize the legislation. 

He asked that the third country fabric provision be continued beyond 2004. 

19

Chairman Thomas noted that Nigeria has energy resources that 

make Nigeria different from other African countries, suggesting 

that Nigeria establish a niche as a supplier of fabric instead of apparel. The Minister responded that he hopes to obtain more information over the next few weeks on this issue and is collecting specifications from Mast Industries. He noted that Nigeria has other 

shortcomings to overcome. 

Chairman Thomas mentioned that Nigeria has not been certified 

for AGOA apparel benefits and asked how he can help. The Minister responded that the legislation authorizing the anti-transshipment measures necessary for certification has not yet passed 

the Nigerian legislature but is expected within the next few weeks. 

He then mentioned two other means for Members to be helpful. 

First, he asked that the technical definition of folkloric and handloomed articles be clarified. Nigeria produces handmade African 

print textiles (not apparel), for which there is no U.S.-produced 

equivalent, that are not eligible for benefits because of a Department of Commerce interpretation. Chairman Thomas offered to 

push the Department of Commerce on the eligibility for such traditional, handmade products given the lack of competition with U.S. 

products. The Minister also asked the Members to consider a linkage between the trade benefits of the Caribbean Basin legislation 

and the Africa legislation. The Chairman responded that this request was politically more difficult because it would require opening the market to everyone, making it hard to control. 

Chairman Thomas also raised the issue of HIV/AIDS, noting that 

awareness, not money, seems to be the biggest obstacle, because 

there is no authority structure to test people. The Minister responded that Nigeria’s president is personally committed to raising 

awareness. Nigeria is beginning to make progress with antiviral 

drugs, and the Minister asked for continued assistance. 

Meeting With Ambassador Linnet Deilly, Deputy USTR and 

U.S. Representative to the WTO 

After some general discussion about the difference between Geneva representatives and ministers from capitals, Congressman 

English asked the Ambassador how the United States is viewed in 

the WTO. The Ambassador pointed first to agriculture, noting that 

the U.S. agriculture proposal is especially timely because of concerns over the U.S. farm bill. She also mentioned the U.S. zero 

duty proposal for industrial goods and said that she has been discussing with developing countries how their tax structures can be 

modified to provide a revenue base if customs duties are reduced 

through the WTO. She also mentioned that she is working with developing countries on the issue of ‘‘special and differential treatment,’’ noting that the more developed of the developing countries 

are concerned that they are being left out. She said that the developing countries realize that they need to reach consensus on this 

issue among themselves first. On services, she is concerned that 

only a few countries are active. 

Congressman English then asked about the prospects for the 

Ministerial meeting in Cancun in September. The Ambassador said 

that many important deadlines for determining modalities in several negotiations are yet to be determined. She pointed in parVerDate Jan 31 2003 04:22 Mar 26, 2003 Jkt 085734 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HR\OC\C734A.XXX C734A
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ticular to the March deadline in the agriculture negotiations for determining modalities, noting that she was concerned that the deadline would not be met, meaning that the issue must be resolved in 

the Cancun meeting in order to finish the Round on time. 

Congressman English asked if there is room in the WTO for improving transparency. The Ambassador replied that there has been 

slow progress, pointing to dispute settlement as a particular area 

of controversy. Congressman English then asked about the negotiations on antidumping, stating that it is hard for the United States 

to come up with reforms in this area. The Ambassador replied that 

the issue is on the agenda, and the New Zealand Ambassador, who 

heads the negotiating group, is sensitive to U.S. concerns. She 

hopes he remains as head of the group. In general, she thought 

these negotiations would have been more adversarial than they 

are, and she does not expect much development before the Cancun 

meeting. 

Chairman Thomas then asked why the EU brought the Foreign 

Sales Corporation case against the United States in the WTO. The 

Ambassador replied that the decision seemed to be ‘‘personality 

driven.’’ Chairman Thomas stated that the United States intends 

to comply, although it is learning from the EU how to comply with 

the letter and not the spirit of the WTO. He said that Members are 

very frustrated by this case and will use every opportunity to put 

others on the defensive. 

Chairman Nussle added that the farm bill was borne of this frustration. U.S. farmers, he said, are ready for a trade war. The Ambassador responded that many WTO members understand this 

frustration, and she noted that the United States is living up to its 

agriculture obligations in the farm bill but showed a desire to increase subsidies in order to compete with others. Chairman Thomas noted that it will be difficult to bring a WTO agriculture agreement to Congress that does not make substantial changes—the 

United States must ‘‘come home with something on agriculture, or 

don’t come home.’’ The Ambassador agreed that agriculture is the 

key opportunity for the United States. She noted that many countries in Africa agree with the U.S. position on subsidies, but it is 

difficult to get them to speak up. 

The Ambassador then brought up the issue of HIV/AIDS, noting 

that the United States was the only country to oppose the new 

trade related intellectual property rights language being offered in 

December. She said that she expects the issue to arise again in 

early February, and positions seem to have hardened in the meantime. She said that the issue is not part of the ‘‘single undertaking’’ 

in the WTO. When Chairman Thomas asked if the developing 

world will walk away from the new Round because of this issue, 

the Ambassador said that many countries believe they are merely 

implementing the Doha Declaration, although they are clarifying 

the ‘‘constructive ambiguity’’ on this issue in a manner with which 

the United States does not agree. The issue, she said, is consuming 

valuable time. 

21

Meeting With Lesotho, Trade and Industry Minister Mpho 

Mallie, Jan. 15, 2003, Mauritius 

Chairman Thomas opened the meeting with Lesotho’s Minister of 

Trade and Industry Mpho Mallie and his delegation by saying ‘‘I 

have been told you are a success story but that you believe your 

success is due to a short term window and that you are working 

hard to turn that window into a door.’’ Minister Mallie agreed that 

Lesotho has taken full advantage of AGOA, particularly the temporary exception that allows least developed countries like Lesotho 

to use third country fabric until 2004. The Minister explained that 

the Lesotho government is still ‘‘riding the crest of a wave’’ as a 

result of elections in 2002, but democracy has raised expectations 

among citizens in Lesotho. He said the Government, defending 

itself against ‘‘the enemies of democracy,’’ is under tremendous 

pressure to demonstrate that ‘‘democracy delivers’’ improved living 

standards and a more equitable distribution of income. 

Minister Mallie said that AGOA has allowed Africans to ‘‘pull 

ourselves up by our bootstraps.’’ He noted that 18 out of 38 eligible 

countries have been certified under the transhipment provisions to 

export apparel benefitting from AGOA preferences to the United 

States and that eight other countries are in the pipeline for certification. While Lesotho has succeeded in attracting investors to establish the biggest denim mill in sub-Saharan Africa, Minister 

Mallie is concerned about what happens to countries that have not 

yet been certified. He noted that the U.S.-Chile Agreement secured 

access for apparel made from third country fabric for ten years 

(under the trade preference levels) and that Chile’s capacity to 

produce indigenous fabric far exceeds Lesotho’s. 

Chairman Thomas noted that, for investors, stability is important and that the United States contemplates a ‘‘free trade layer 

on top of AGOA’’ in the form of a permanent free trade agreement 

with SACU countries. He urged the Minister to think in terms of 

building on current success by investing ‘‘back in the African region’’ so that investment doesn’t always have to come from Sri 

Lanka, Taiwan, and other Asians countries. Chairman Thomas expressed his concern with countries like Nigeria who have yet to 

pass the necessary legislation to make them eligible for certification (for apparel benefits) under AGOA. In light of these delays, 

it will be difficult to extend the third country fabric provision ‘‘because Members of Congress have been promised action and concrete results.’’ He asked what progress Congress could expect from 

uncertified countries if the third country fabric provision is extended. 

Minister Mallie turned the discussion to the case of Lesotho, 

which has succeeded in meeting the challenge of putting the necessary legal framework in place to be certified for apparel benefits. 

He said that a short extension of the third country fabric provision 

would give stability to investors in Lesotho and encourage additional investments in new fabric and yarn mills. Negotiations on 

these potential projects are fairly advanced but hinge on Lesotho’s 

ability to support the projects with adequate infrastructure, including power and water. He said a study has been commissioned for 

the Metolong water project, which would dam the area in order to 

supply water to industrial sites under consideration by investors in 

22

the city of Maseru. Unfortunately, Lesotho has the additional problem of securing funding to construct this infrastructure to supply 

the factories, and time is running out on the third country fabric 

provision. Before the textile and yarn production can come on line, 

Lesotho will face a requirement to use local (or U.S.) fabric. 

Chairman Thomas said that he appreciated this very concrete, 

practical example of problems that Lesotho, a country that has 

made huge efforts to comply with AGOA conditionality, was having 

in making further progress in the face of the 2004 expiration of the 

third country fabric provision. This example, said the Chairman, is 

‘‘a real thing I can sell’’ in Congress. 

Working Lunch Meeting With National Retail Federation 

Erik Autor, Vice President of the National Retail Association, 

noted that ethical and security compliance issues increase the costs 

for apparel production at a time when prices are dropping, creating 

a daunting challenge. He mentioned that the AGOA certification 

process has been slow, which in turn slows investment decisions. 

He raised the question of whether the African industry can survive 

the expiration of third country fabric eligibility in 2004 and the end 

of global quotas in 2005. However, he also noted that the retail industry knows that it is risky to deal entirely with China instead 

because he expects a large number of safeguard cases once quotas 

expire. He suggested a short extension of the third country fabric 

provision to allow the African industry to develop its own fabric 

and yarn production. A long extension, however, would hamper the 

development of this industry. He also suggested a transition rule 

out of third country fabric to either a series of tariff rate quotas 

that would be ratcheted down or to an EU-style rule of origin (requiring double transformation using third country yarn but regional fabric—fabric forward—which would be easier for suppliers 

because the rule would be same for the United States and the EU). 

The Shibani representative noted that he would not invest in a 

spinning operation in Africa because it is too expensive; he would 

rather purchase yarn. He agreed that a double transformation rule 

would be better in Africa. He noted that Africa cannot compete 

with China’s wage levels. 

Chairman Thomas noted that China cannot be stopped in its 

drive to develop. He asked how a favorable environment for Africa 

can be created instead. Autor replied that China beats Africa on 

price, quality, and on time delivery—China could clothe the world. 

Janet Rivett-Carnac noted that the vendor base has contracted. 

Chairman Royce asked about the differential in the labor rates between China and Africa. Autor noted that Chinese wage rates are 

very low, particularly where workers are imported from rural areas 

to work in textile mills. He noted that many retailers are looking 

to Vietnam, which is expected to be a major player and is increasingly a competitor of China for labor. Although the wage rate is approximately $95 a month in Vietnam (versus $55–60 in Africa), the 

workers are quite skilled. Rivett-Carnac noted that China has a 

huge advantage because the cost of fabric is the largest component 

in the cost of apparel and China’s fabric production is state owned. 

In response to a question from Chairman Royce as to whether ChiVerDate Jan 31 2003 04:22 Mar 26, 2003 Jkt 085734 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HR\OC\C734A.XXX C734A
23

na’s fabric production is subsidized, Autor noted that China is indeed vulnerable to unfair trade cases. 

Chairman Thomas remarked that worker conditions in the African factories visited by the delegation seem to be quite good, while 

in China, it is necessary to see the entire factory to understand the 

working conditions. Autor responded that Sears estimates that China’s worker rights compliance is only about 45% (primarily because 

China employs so many workers from the rural areas), while Vietnam and Bangladesh have a 98% compliance rate. 

AGOA Forum Sponsored by Non-Governmental Organizations 

Congressman McDermott attended the opening of the NGO 

Forum and gave introductory remarks expressing his pleasure in 

seeing the benefits of AGOA and the potential to further progress. 

His comments follow. 

Given how trade with the United States has helped the Asian 

economies, a similar relationship between the African nations and 

the United States should also lead to enormous potential for Africa. 

The historical policy of simply giving aid and assistance is not creating satisfactory results. Mauritius led the effort to change U.S. 

policy from aid to trade. Congressman Rangel and Chairman Crane 

were critical to passage of the original AGOA legislation, and more 

recently Chairman Thomas’ leadership in passing AGOA II shows 

that the Congress will remain engaged in sub-Saharan African 

trade matters. ‘‘As Africa flourishes so does the United States.’’ Regarding agriculture, Africa needs to push for the curtailment of 

U.S. and EU agriculture subsidies and work toward the means of 

getting their goods to market. The United States needs to work on 

giving assistance to African exporters on how to meet the strict 

SPS requirements of the West. The delegation saw in Namibia how 

important infrastructure is to growing African economies. AIDS is 

the single most important challenge facing Africa given that it can 

destroy the society and the economy—farmers, teachers, health 

workers, parents. Hopefully, AGOA will show that Africa can compete in the world market. Africans and Americans should not focus 

exclusively on trade; African nations need to invest in people, education, and healthcare too. 

Bilateral Meeting With South African Minister for Trade, 

Alec Erwin 

Chairman Thomas invited Minister Erwin to comment on the 

SACU Free Trade Agreement with the United States, HIV/AIDS, 

and multilateral negotiations at WTO. Minister Erwin expressed 

the same concerns that other AGOA beneficiaries did, primarily focusing on the problems related to the expiration of the Act and the 

general ‘‘footloose’’ nature of the textile and apparel industry. By 

this he explained that the textile and apparel industry is perceived 

to be able to easily open and close facilities and thus is not a dependable direct investor for a developing country. For these reasons, the SACU–FTA is an exciting prospect to lock-in AGOA benefits for SACU. Minister Erwin noted that non-AGOA exports are 

much larger and more important for South Africa since it is very 

competitive on energy. Fabrics are in short supply in South Africa, 

24

and it has the workforce and capital to invest in sophisticated machines and operations that bring more certainty and better jobs to 

the country. For example, Lesotho benefits from its access to South 

African infrastructure—roads, water, and energy, and South Africa 

can provide many of the accessories for apparel, such as zippers 

and buttons, that support Lesotho’s new industry. 

According to Minister Erwin, the export problems that South Africa faces with the United States are certain tariff escalations and 

peaks ‘‘on anything expensive.’’ Also, South African sugar, including glucose for chemical or food products, and various products face 

an average of 7% tariffs. Their goal in the U.S. FTA is to replicate 

the benefits they receive with the EU. Erwin commented on trade 

with Europe as being very complex. For example, the top twenty 

export categories to Germany are also the top 20 imports. With the 

United States, South Africa’s dominant export is diamonds, and it 

imports the usual high-tech equipment such as computers. South 

Africa also does well exporting fiber products to Mauritius. 

Regarding Namibia, Minister Erwin noted that it had a shortage 

of water in the south and thus was more competitive with apparel 

and spinning rather than textile production. Like Lesotho, Namibia 

benefits from South Africa’s cheap energy. Also, Namibia has a 

good, skilled workforce that has a lower cost than South Africa. 

Mr. McDermott asked whether the expiration of the third-party 

fabric provision is good for South Africa. Erwin replied that South 

Africa can supply some but not all third party fiber or fabric. So, 

South Africa supports the extension of the third party fabric provision past 2004. He also noted that South Africa can supply fabrics 

and fibers cheaply in part because of their energy surplus, but not 

nearly the range of products that the United States demands. In 

general, South Africa exports bulk product to nearby countries like 

Lesotho or Namibia. More expensive exports remain in South Africa in order to fly to the United States or Europe. South Africa 

would like lower cost production to migrate out of the country thus 

leaving more skilled industries and jobs to remain such as engineering and chemical products. South Africa does not expect to be 

a clothing-driven economy but will remain involved in textile production for the benefit of other SACU countries. This is unlike the 

EU-South Africa trade agreement in which only South Africa’s interests are involved. 

Minister Erwin commented on South Africa’s general free trade 

views. It is engaged in trade negotiations with Mercosur and 

China. Chairman Thomas asked Minister Erwin to comment on 

multilateral issues. Minister Erwin said that the South African agriculture industry is closely unified with the United States’ stance 

in the WTO although South African farmers are also critical of the 

U.S. farm bill. He then provided a brief analysis of different multilateral issues. He noted that South Africa differs with the United 

States on Rules but holds similar views as the United States on 

GMOs, Geographical Indications, Competition, SPS, and Market 

Access. 

The delegation also discussed some of the peculiar infrastructure 

conditions in southern Africa, in particular the rail system. Southern Africa inherited two non-compatible rail gauges, one built by 

25

the British and one by the Germans. New additions require the Africans to choose which gauge to use. 

Bilateral Meeting With Kenyan Minister for Trade, Mukhisa 

Kutiyu

Minister Kutiyu described Kenya’s various issues such as the 

benefits Kenya derive from AGOA, but also that Kenya seeks to 

move beyond AGOA benefits. He sees growth through further integration with the region and the rest of world. Kenya has some 

trade problems with the United States related to the complex nature of U.S. inspectional services and the ability to understand and 

meet U.S. product standards for inspections and packaging. Delegation members acknowledged that they recognize the general difficulty many African nations have in meeting U.S. agricultural 

standards. The United States has recently announced efforts to station U.S. inspection experts at hubs in Africa in order to provide 

technical assistance to African exporters. The Kenyan delegation 

received this information with appreciation. 

Another problem proving to be more intractable is the bombing 

of the American embassy in Mbasa, which has caused business to 

be reluctant in investing in Kenya. The Kenyans noted a general 

stigma has since attached to the country. The Kenya delegation 

commented that Kenyans consider Americans to be good partners. 

Kenya also seeks more assistance for trade capacity building, and 

they are grateful for what USAID has provided their country. Minister Kutiyu noted that women in Kenya have also benefitted from 

enhanced trade and AGOA. He expressed concern about the expiration of AGOA and the chilling effect the deadline has on Kenya’s 

ability to attract new business. 

Minister Kutiyu also emphasized the importance of maintaining 

good credit arrangements for Kenya. Kenya is willing to put ‘‘seed 

money’’ into building the infrastructure required by businesses. 

Some infrastructure is difficult to accommodate, however. For example, when tourists come with credit cards, small street vendors 

with stalls are not able to accept them. 

Minister Kutiyu noted that his party won on promises to fight 

corruption and to rely upon market principles. Last week the government’s major anticorruption bill passed, and a public ethics bill 

is being considered with new conditions that will remove any form 

of corruption. ‘‘We are staking our political future on it.’’ He recalled anecdotes of how local police would ask overcrowded busses 

for bribes, and this pent up frustration by the public has boiled 

over. Chairman Thomas asked whether there were any big cases 

that highlighted Kenyan efforts, and Minister Kutiyu said there 

have been a couple. 

The Kenyan delegation returned the discussion to the 1988 terrorist attack on the U.S. embassy and its chilling effect on business. Also, the U.S. treatment left a bad impression on Kenyans because the Kenyan victims received compassionate mention and 

some payment to affected relatives, but the U.S. press emphasized 

the fewer Americans who were harmed. Last year there was an attempt to blow up a passenger airplane. The Kenyan delegation 

stated that Kenya had suffered more than other African countries 

from terrorism, and although it joined the war against terrorism, 

26

Kenya remains a soft target with no capacity to preempt such a 

strike. Chairman Thomas mentioned a similar problem in South 

American countries due to the presence and violence of drug lords. 

The Kenyans described their poor infrastructure and how this affected farmers’ ability to get goods to market, and there is a need 

for partnerships to help replace transportation facilities. 

On the issue of subsidies, the Kenyan minister noted that Kenya 

votes with the United States at the WTO in wanting to remove 

subsidies, but Kenya’s trade with the United States is selective and 

smaller than that with Europe. Subsidies allow countries to sell 

cheaper into markets that Kenya could be competitive in, such as 

wheat, milk, and meat. ‘‘We should export but instead we import 

these goods.’’ The delegation noted this to be common ground that 

Kenya and the United States shared. Also, on the issue of biotech, 

Minister Kutiyu stated that he supported its use and Kenya wants 

to ‘‘maximize production with science.’’ 

SOUTH AFRICA 

South Africa has a population of 44.6 million people and a gross domestic product of $126 billion growing at 2.0% per year. South 

Africa currently has a high rate of unemployment at 28.8%, and although the national currency (the Rand) dramatically fell several 

years ago, there has been a strong increase in the last two years. 

South Africa remains a deeply segregated society with very uneven 

distributions of wealth and income, despite efforts by the new government to create affirmative action and black empowerment policies. There have been marked improvements recently in public 

housing and electrification for poor communities. South Africa exports $42 billion to the United States, largely minerals such as diamonds, iron, ores, and soda ash. U.S. exports to South Africa of $3 

billion consist of aircraft, computers, television and radio parts, and 

medical equipment. Moreover, the United States has $2.8 billion in 

direct foreign investment in South Africa, the top investors being 

SBC Communications, Dow Chemical, and Coca-Cola. The relative 

political stability, excellent infrastructure, and respect for the rule 

of law create an attractive commercial atmosphere for foreign companies although there remain some government monopolies in 

areas such as telecommunications. 

South Africa is a newly independent nation having gone through 

decades of civil strife due to the infamous apartheid government 

that denied basic human and legal rights to the majority of the 

black South African populous. A new government was created in 

1994, and until outlawed, African National Congress (ANC) became 

the majority governing party in the first election. Opposition parties have not yet formed although there are signs of fractures beginning in the ANC as the older, revolutionary generation turns 

over power to younger members. 

Country Briefing With Ambassador Hume, Capetown, South 

Africa 

Ambassador Hume and his country team provided an overview of 

United States-South Africa relations, regional and domestic politics, the HIV/AIDS crisis, the economic situation, and cooperation 

with the United States on international crime and terrorism. 

27

The Ambassador noted that South Africa has pursued a parliamentary system of government since apartheid ended, along 

with economic reforms. The African National Congress (ANC) has 

significant power under the current system, in which legislators 

are elected under party controlled ‘‘lists’’ rather than directly by 

voters. The ANC currently controls 66% of the seats in Parliament. 

There are a number of parties smaller than the ANC, but there is 

little coordinated opposition to the majority. The ANC’s strong majority is perceived as a potential but not present danger to democracy because there is freedom of press and speech and a great deal 

of open debate and criticism of various government actions. The 

major focus of the government has been in improving the economy 

and providing more opportunities for black South Africans. The 

government emphasizes rule of law and democratic values. Voters 

are seeking increased economic growth, job creation, and control of 

crime. 

Crime is a serious problem. South Africa has the world’s highest 

rates of homicide and rape. There are media reports of Al Qaeda 

and other terrorists present in South Africa. The government is cooperating with the United States on security and law enforcement 

issues. The United States is providing South Africa with assistance 

such as by training prosecutors and developing laws. 

The AIDS pandemic is the most significant health crisis facing 

the nation. AIDS is already producing high death rates in women 

in the early 20s and men in their early 30s. South Africa is the 

most affected country in the world with 5 million HIV infected individuals, representing with 25% of young women, 22% of the military, and 30% of miners—one of the most important industries in 

South Africa. The death rate will continue to climb through 2010. 

Life expectancy is expected to fall from 59 years to 41. The disease 

affects all economic and ethnic groups. Current expectations are 

that the disease will create millions of orphaned children during 

the next decade. Efforts to deal with the disease have been hampered by the government’s acceptance of spurious scientific views 

disclaiming the link between HIV and AIDS. Some South African 

officials have publicly denied the link, undermining public health 

agency efforts to provide care and prevent disease transmission. 

Former President Nelson Mandela has stated that his one regret 

is that he did not initiate a comprehensive program of HIV/AIDS 

awareness and treatment. Since his retirement, he has spent a 

great deal of time raising money and awareness of the issues and 

even criticizing President Mbeki and the ANC for its inaction. 

Government agencies are providing assistance to pregnant 

women in an effort to prevent transmission of the disease to infants. Private companies have also initiated programs to educate 

people about the disease and to prevent transmission. The U.S. 

Agency for International Development, the National Institute of 

Health, and the Kaiser Foundation are working in South America 

on AIDS care and prevention programs. NIH has established grant 

programs to support treatment and research. 

In the foreign policy arena, South Africa is leading efforts within 

the region to promote economic union. South African President 

Mbeki is a supporter of open government, and the country has supplied 1,700 peacekeepers to Burundi to support the peace process 

28

there. Similarly, South Africa has placed peacekeepers in the 

Congo. However, South Africa has been reluctant to criticize the actions of President Mugabe in Zimbabwe despite his property seizures, economic policies that have led to starvation conditions, and 

the general destabilizing effect his policies have caused. 

South Africa has developed strong ties with the United States. 

There are frequent high-level government meetings. Five U.S. cabinet members visited the country last year. The two nations are cooperating on peace and security issues in the region, international 

crime, and international health issues such as AIDS, sexually 

transmitted diseases, child abuse, and alcoholism. 

The region is also facing a severe food shortage. Adverse weather 

conditions and the Government of Zimbabwe’s change in land ownership policy have reduced farm output. Some 14.4 million people 

in the region need food aid at this time, 6.7 million of them in 

Zimbabwe. The United States has donated over 500,000 metric tons 

of food aid with a value of over $260 million. Some governments, 

however, are rejecting aid because of their refusal to accept product 

produced with GMOs. Zambia has rejected GMO product outright, 

while Mozambique and Zimbabwe are imposing strict labeling and 

milling requirements that limit the distribution of the food aid. South Africa’s 2001 GDP was $110 billion. The nation dominates 

the region; its economy represents 25% of the GDP, of all of Africa. 

It is the third largest beneficiary from the AGOA legislation. The 

government has maintained sound economic policies since 1994. 

Government deficits have been relatively low as a percentage of 

GDP, and the central bank has operated independently of the executive branch and has adopted conservative policies. 

The nation has continued to divert its economy since the transition to majority rule. Manufacturing has increased while minerals 

production now represents less than 10% of the economy. Efforts 

are being made to engage in adding value to the nation’s mineral 

products. The telecommunications and other infrastructure systems 

are in good condition, and the financial sector is highly developed. 

Agriculture represents under 4% of the economy, and the nation 

is relatively self-sufficient. Wine and processed fruits are prominent sources of exports. Grain prices have escalated significantly, 

particularly for maize and meal, due to abnormally low crop yields 

and a weak Rand. There are no marketing boards or price controls 

in the agriculture sector. 

Exports fueled the nation’s 3% economic growth last year. Similar growth is expected this year, despite expectations that a 

strengthening Rand will reduce exports. AGOA programs have contributed to economic growth and to expanded exports. Last year, 

AGOA supported 89,000 jobs in the country, up from a level in excess of 60,000 in 2001. The AGOA II legislation, particularly expansion of access to the U.S. market for merino wool and sweater products, has further extended opportunities. 

Bilateral trade with the United States exceeded $7 billion during 

2001, more than the level of bilateral trade between the United 

States and Chile. Major U.S. exports include aircraft, pharmaceuticals, and computers. There remains a significant divide in the 

distribution of wealth. Some 60% of black south Africans live in 

poverty. Black per capita GDP is slightly more than $1,000 while 

29

white South Africans have a per capita GDP over $7,000. The government is attempting to improve the standard of living through a 

number of programs. Since 1994, the government has built 1.2 million units of low cost housing, has extended electricity service to 

70% of the nation’s houses, and has improved water services to the 

point where 84% of the public have access to clean water. 

The nation does face a number of economic challenges. The HIV/

AIDS pandemic threatens to undermine the nation’s work force, 

and levels of savings and investment are rapidly falling. A series 

of labor issues, including rigid labor laws and a shortage of skilled 

labor, could limit growth. Violent crime has destabilized the economy. There are also continuing questions about black economy empowerment policies; Embassy staff noted that a recently leaked 

draft government paper on ‘‘reforms’’ in investment policies caused 

panic among investors and a sharp drop in investment values. Finally, uncertainty about potential spill over impacts from instability in Zimbabwe has raised concerns for investors. 

Visit to the Michael Mapongwana Community Health Center, Khayelitsha, South Africa 

The Western Cape Province has the most progressive HIV/AIDS 

policies in South Africa, with a program that is nearing 100 percent coverage in the use of nevarapine to prevent Mother to Child 

HIV Transmission (MTCT). The Western Cape also has begun to 

introduce anti-retroviral (ARV) AIDS treatment in public health 

clinics with plans for full implementation over the next three years. 

The use of ARVs has been piloted for over three years in 

Khayelitsha by Doctors Without Borders (French acronym MSF) in 

coordination with the provincial health department. As of July 

2002, the province has also worked in partnership with a British 

NGO relying exclusively on local medical practitioners at a clinic 

in Guguletu. Dr. Fareed Abdullah, the delegation’s host for the 

visit, is the architect for the province’s programs, which also include a strong health and life skills education program in schools. 

This robust program began in 1999, when the Western Cape Provincial Government was controlled by an opposition coalition without ANC participation—the New National Party (NNP) plus the 

Democratic Party, later merged into the Democratic Alliance (DA). 

When the NNP walked out of the DA and formed a new ruling provincial coalition with the ANC late last year, however, the new government quickly and publicly pledged its continued commitment to 

the existing health program. The current coalition government’s 

Health Minister, Piet Meyer, is from the NNP. 

The province and Doctors Without Borders are the joint recipients of a grant from a consortium of U.S. and international foundations through Columbia University’s Mailman School of Public 

Health for ‘‘MTCT-Plus,’’ a program that includes AIDS treatment 

with MTCT programing. The Michael Mapongwana clinic, therefore, administers nevarapine at its maternity clinic to impede 

transmission of HIV from mothers to their children, and the adjacent MSF clinic makes ARV therapy available to afflicted adults, 

including mothers. There is also a package of psychosocial support, 

including community outreach and education, patient education, 

and counseling. Hope Worldwide also participates in counseling 

30

and community outreach in Khayelitsha, including at the Michael 

M. clinic. Hope Worldwide is strongly supported by USAID in 

South Africa. 

The clinic in Khayelitsha serves the surrounding impoverished 

area for the purpose of providing treatment and prevention counseling to women to prevent Mother to Child HIV Transmission. The 

area has a 22% infection rate. It has a 3-year old pilot program for 

the use of the drug nevarapine, an anti-retroviral AIDS treatment. 

The clinic is sponsored by Doctors Without Borders, a French-based 

organization, in coordination with the Western Cape provincial 

health department. 

Khayelitsha is largely populated by temporary tin plate-sided 

constructions, although many receive electricity due to government 

efforts. The delegation passed miles of slum areas and was told 

that Khayelitsha is home to over 750,000 people on the outskirts 

of the more affluent Capetown. Nonetheless, the delegation noted 

the first class road system that runs throughout the area. Embassy 

staff remarked that the former South African government required 

such a system in order to exercise control over the population and 

also to provide transportation for those who traveled to work. 

The clinic is a one-level building with administrative offices to 

process women seeking treatment, testing, or counseling. There 

was a common waiting room, and the delegation saw several dozen 

patients. The clinic also has 10 beds for women in labor. Part of 

the program involves a group counseling and education session in 

which HIV and AIDS is explained as well as behavior that can lead 

to infection. Since breastfeeding accounts for 15% of mother-child 

transmissions, part of the counseling involves dissuading women 

from breastfeeding despite the social and cultural pressures to the 

contrary. Particularly effective were women who had been effectively treated and could demonstrate that while they had HIV/

AIDS, their children did not. The clinic has tested over 20,000 

women, which Dr. Abdullah commented was a high proportion of 

the community and which helped take the stigma of the clinic 

away. Most women tell their spouses of the test results, despite the 

high risk that their spouses will abandon them. There is an effort 

to attract the spouses for testing and treatment. One dose of the 

drug nevarapine decreases transmission by 50%. 

CODEL Physician’s Professional Observations (Lt. Cmdr. 

Timothy Burgess, U.S. Navy) 

The maternity clinic in Khayelitsha was notable for its modern 

and well-equipped (by Sub-Saharan African standards) obstetrical 

facilities, with the exception of open wards for laboring women 

(versus private or semi-private rooms). The model program for 

interruption of mother-child transmission of HIV appeared to be 

comprehensive and effective. Dr. Abdullah indicated that transmission rates in his program were decreased by ‘‘about 50%,’’ which 

is consistent with results in other settings such as Thailand. On 

further specific questioning, Gray Handley from the U.S. Embassy 

indicated that the actual figure ranged from 23–50%. It was not 

possible to ascertain data on how advanced the HIV disease is with 

the patients since there are no facilities nor funds to collect the 

data; the information is of interest because it would impact both 

31

the expected transmission rate as well as the expected benefit of 

MCTC interruption therapy. 

For South Africa the largest issue affecting the provision of 

antiretroviral therapy is governmental acceptance of current theories and practices, as was discussed by a number of the members 

including Chairman Thomas and Congressman Royce. For Africa, 

generally the first key issue is identifying infected individuals. Regardless of the intervention (counseling on prevention, targeting 

MTCT, providing ARV therapy, etc.), identification of infected individuals is the first step. This involves two factors: Having a reliable, cheap, easy test available, and persuading the population to 

accept and participate in testing. In Namibia, the CDC program relies on a particular commercially available rapid diagnostic test.

All testing must be accompanied by counseling and psychosocial 

support: a positive test may cause tremendous emotional stress and 

potential ostracism if publicized, but a negative test may result in 

a false sense of security or invulnerability that results in subsequent increased behavioral risks. A separate issue is that of discordant results among couples (one partner positive, the other negative). In societies where women have less standing than men, a 

positive result could result in ostracism—at best—if the husband 

is negative or (much more likely) refuses testing. This question was 

posed in Khayelitsha, but statistics were not available. 

ARV medications are not without risk, primarily societal risk. 

They are not one-time interventions, except in the case of MTCT 

prevention with nevarapine; they must be taken for life to treat an 

established infection. The drugs must be taken as prescribed in 

sometimes complicated regimens, or they are ineffective. Not only 

are they ineffective for the individual who is not adherent to the 

regimen, but the risk of HIV resistance to ARV meds is markedly 

increased. That is, partial treatment may lead to a person’s own 

HIV becoming ARV-resistant; this could result in transmission of 

resistant virus to others, analogous to the situation with multidrug resistant TB. Resistant HIV has already emerged in the 

United States, before widespread use of ARV in Africa. So the risk 

of a direct contribution of resistant HIV developing in Africa (from 

poorly administered drugs) to global spread of resistant HIV may 

or may not be significant, but the possibility certainly exists and 

data is probably not available to quantify the risk yet. 

Simple provision of medications, at whatever cost and by whomever, whether patent-protected or not, is not the solution to the 

problem of HIV/AIDS in Africa, or anywhere. The ultimate solution 

is disease prevention (ideally transmission prevention, either behavioral or with a vaccine). Progress on this front is being made 

(in part by the U.S. military, incidentally), but this solution is not 

imminent. The interim solution involves interruption of transmission and, where possible, treatment of infection. But absolutely 

pivotal to these interventions is an infrastructure that supports 

them. Such infrastructure is very unlikely to exist without governmental support in-country. 

Visit to BMD Textile Plant in Capetown, South Africa 

Chairman Thomas toured the 40,000 square meter BMD Textile 

manufacturing plant at Capetown. In addition to high quality fabVerDate Jan 31 2003 04:22 Mar 26, 2003 Jkt 085734 PO 00000 Frm 00037 Fmt 6633 Sfmt 6602 E:\HR\OC\C734A.XXX C734A
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rics and apparel, the plant manufactures technical textiles such as 

tarpaulins, commercial banners, awning fabric, and geosynthetics 

for engineering, agriculture, mining, and building applications. The 

plant uses state-of-the-art computer graphic design and fabric finishing controls. 

Press Conference in Capetown, South Africa 

The delegation met with local press, who asked about the prospects of an AGOA extension, findings of the CODEL, and the problems of the continued leadership of President Mugabe in 

Zimbabwe. The local press reported the delegation’s views that 

President Mugabe was a harmful element to his own people and 

should leave office. Chairman Royce commented that this crisis has 

affected South Africa by making the area less attractive and stable 

for foreign investment. Other criticisms the delegation voiced were 

that President Mugabe had stolen last year’s election, opposition 

leaders had been murdered, and food was being used as a political 

weapon and going first to the military and political leaders.