[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
ADVANCING THE U.S. TRADE AGENDA:
TRADE WITH AFRICA AND THE AFRICAN
GROWTH AND OPPORTUNITY ACT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TRADE
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
July 29, 2014
__________
Serial 113-TR07
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON TRADE
DEVIN NUNES, California, Chairman
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
DAVID G. REICHERT, Washington RICHARD E. NEAL, Massachusetts
VERN BUCHANAN, Florida JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska EARL BLUMENAUER, Oregon
AARON SCHOCK, Illinois RON KIND, Wisconsin
LYNN JENKINS, Kansas
CHARLES W. BOUSTANY, JR., Louisiana
PETER J. ROSKAM, Illinois
C O N T E N T S
__________
Page
Advisory of July 29, 2014 announcing the hearing................. 2
WITNESSES
Ben Leo, Senior Fellow, Director of Rethinking U.S. Development
Policy, Center For Global Development.......................... 6
William C. McRaith, Chief Supply Chain Officer, PVH Corp......... 18
Witney Schneidman, Senior International Advisor, Covington &
Burling LL; Nonresident Fellow, Africa Growth Initiative,
Brooking....................................................... 27
SUBMISSIONS FOR THE RECORD
Africa Coalition for Trade, statement............................ 46
African Cotton & Textiles Industries Federation, statement....... 52
American Sugar Alliance, statement............................... 58
Brown Shoe 072914TR, letter...................................... 69
Footwear Distributors and Retailers of America, letter........... 71
National Pork Producers Council, statement....................... 73
U.S. Chamber, statement.......................................... 77
CBI Sugar Group, statement....................................... 86
ADVANCING THE U.S. TRADE AGENDA: TRADE WITH AFRICA AND THE AFRICAN
GROWTH AND OPPORTUNITY ACT
----------
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:04 p.m. in
1100 Longworth House Office Building, the Honorable Devin
Nunes, [Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
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Chairman NUNES. I would like to call the Committee to
order. Good afternoon. Welcome to today's hearing on advancing
our trade agenda and trade with Africa. Before hearing form our
witnesses, I would like to make three points.
First, we are committed to a seamless, bipartisan renewal
of AGOA well before its expiration in fifteen months.
Congressman Rangel and I worked closely in developing this
hearing--having jointly selected all the witnesses--and we are
cooperating to develop a plan for AGOA's renewal. To improve
the program, we are studying possible changes with an eye
toward strengthening utilization and effectiveness. We are
listening to stakeholders on issues like capacity building,
product coverage and rules of origin, eligibility criteria, and
graduation among others, so that we can determine what changes,
if any, are appropriate. To assist in our review we have
requested an extensive study from GAO. In addition, as part of
this hearing, we are requesting and encouraging additional
analysis and suggestions from the public.
Second, to make AGOA more effective, we must help Africa
address both political and supply side barriers to trade. To
encourage greater regional and global integration, Africa must
remove domestic barriers to trade and investment, including
high tariffs, forced localization requirements, legal
restrictions on investment, and customs barriers, among others.
Supply-side constraints such as poor infrastructure, lack
of regional integration, and other obstacles impede AGOA
utilization. We are working with Chairman Royce and the Foreign
Affairs Committee to develop approaches to assist African
countries in maximizing AGOA utilization. For example, earlier
this year the House passed the Electrify Africa Act with strong
bipartisan support. I call on the Senate to act quickly on this
important legislation.
Implementing the recently concluded Trade Facilitation
Agreement would also help Africa address supply side
constraints and encourage greater investment from private
sector and development banks. I am frustrated that India is
blocking adoption of the deal it agreed to last December,
harming developed and developing countries alike and
threatening the WTO's viability.
Third, as we renew AGOA, we should look at ways to deepen
and expand our trade relationship with AGOA countries. We
should expand our TIFA and BIT programs, and seek BITs with
regional groupings. As countries become ready, we should begin
negotiating FTAs for the most robust trade relationship. At the
same time, I am concerned by the EU's efforts to withdraw
unilateral preferences and force African countries to sign
bilateral agreements. This approach disadvantages U.S.
companies seeking to do business in Africa and raises serious
policy and development concerns.
Finally, the bipartisan TPA bill that I co-sponsored
earlier this year with Chairman Camp includes strengthened
provisions on capacity building and development. I call on the
Administration to work with Congress to pass this important
legislation.
Chairman NUNES. I will now yield to Ranking Member Rangel
for the purpose of an opening statement.
Mr. RANGEL. Thank you, Mr. Chairman. It is so refreshing to
listen to a Chairman of the majority to give a statement that I
don't have to rebut or contest, or to display political
eloquence in terms of why I have a different idea. You have
really worked hard, not only on this bill, but what's in the
best interest of our great country and how we can help these
struggling countries that for so long have been neglected.
And I cannot think of a better time to do this as the
President of the United States has invited 50 heads of the
African countries to come, not only to discuss the African
growth and opportunity bill, which we have these experts here
to share with us, which is the best direction, but also to be
able to look at the broad question of what contribution we and
other nations can make to be of assistance to the spectacular
growth of the economy of these African countries. And, as you
said, the reports indicate there are some things, a lot of
things that we can do better, and working together we would.
In addition to having the heads of states, there are 500
young people from Africa that have been coming to the United
States in order to learn more about our system, both in the
private and public sector. And I can't think of a better way
than--to improve our relationships with the countries except
through their young people. I am seeing that you have given
permission for Congresswoman Karen Bass to share with us, and I
want to thank you for this courtesy, because no member of this
Congress has displayed more in terms of more hard work, which
is the most important thing, but interest in seeing what the
United States and what the Congress, and more specifically our
Committee with the Foreign Affairs Committee, in working
together under your leadership can do.
And so I want to thank you for your commitment, and also
thank the witnesses for helping us and directing us to see what
we can do better. I truly believe, without exaggeration, that
this is a historic time in our international trade policies.
The countries of Africa, the last to get on board, and with our
help I am certain they can catch up.
Thank you so much, Chairman Nunes.
Chairman NUNES. I want to thank you, Mr. Rangel. There is
no one committed more to getting AGOA passed than yourself from
the time of our first meeting when I became chair of this
committee. This was your priority and we worked together on
this. And there is nothing better than having three witnesses
here that we all agree upon. I want to welcome all three of
you.
The first witness is Ben Leo, Senior Fellow at the Center
for Global Development. Our second witness is William McRaith,
Chief Supply Chain Officer for PVH Corporation. Our third
witness is Witney Schneidman, Senior International Advisor for
Africa at Covington & Burling, and a non-resident fellow for
the African Growth Initiative at the Brookings Institution.
Before we recognize our witnesses, our time is limited this
afternoon. You should limit your testimony to five minutes and
Members should keep their questioning to five minutes.
Mr. Leo, your written statement will be made part of the
record, and you are now recognized for five minutes.
STATEMENT OF BEN LEO, SENIOR FELLOW, DIRECTOR OF
RETHINKING U.S. DEVELOPMENT POLICY, CENTER FOR GLOBAL
DEVELOPMENT
Mr. LEO. Thank you, Chairman Nunes, Ranking Member Rangel
and other Members of the Subcommittee.
I appreciate the opportunity to discuss ways to advance the
U.S.-Africa Trade and Investment Agenda. This hearing and the
broader examination of the African Growth and Opportunities
Act, along with other U.S. policy tools, is extremely well-
timed. When African leaders and business people come to
Washington next week, we all expect them to deliver a very
united message that their most pressing objectives are seeking
ways to generate more trade and investment with the United
States.
My remarks today will focus on four interrelated points.
First, the global competitiveness of African firms is primarily
constrained by business climate issues, small market size and
collusive political economic dynamics. Business surveys paint a
very clear and very stark picture. The biggest constraints are
unreliable and costly electricity, high transport costs and
export processing times and access to capital. Addressing these
kinds of factors, even if only on the margins, will have a
greater impact on U.S. trade and investment than further
expanding AGOA's market access provisions. The key question is
determining where and how the U.S. can best incentivize and
support reforms by committed African governments.
Second, despite clear criteria, AGOA country eligibility
decisions have not reflected whether African governments are
establishing market-based economies and favorable business
climates. AGOA was originally designed as a compact with
African governments, founded upon a commitment to sound
economic policies, democratic pluralism and respect for human
and labor rights. While Congress created these eligibility
criteria equally, successive administrations have implemented
them in highly unequal ways.
In practice AGOA eligibility has been used to promote
democratic freedoms, which is a good thing, while economic
freedoms have been basically ignored in the eligibility
determination process. Going forward, Congress should consider
conditioning preferential access to the $17 trillion U.S.
economy upon business climate reforms.
Third, with a few very important exceptions, U.S. trade
capacity building programs lack an overarching strategy and
have been fragmented and under-resourced. What we often find
are a multitude of very small U.S. Government agencies
providing sporadic and largely insignificant assistance.
Moreover, U.S. assistance for regional economic communities has
been modest, despite their outsized role in facilitating
regional integration and helping to address the problem of
small market size. On the positive side, the Millennium
Challenge Corporation and more U.S. initiatives like Power
Africa and the little-known Trade Africa Initiative are
focusing on the right issue sand doing a good job. The key is
ensuring that they have scale and staying power. Going forward,
Congress and the Obama Administration should bring greater
focus and coordination and scale to trade capacity building
programs in Africa.
Lastly, the U.S. Government should actively pursue legally
binding, bilateral investment treaties as an additional way of
promoting economic freedoms and greater trade and investment
flows. These treaties can encourage investment by providing
investors with protections against things like expropriation or
discriminatory treatment; however, the U.S. has only ratified
six treaties with sub-Saharan African countries over time,
which covers a mere seven percent of regional GDP. And, to-
date, the Obama Administration has not successfully negotiated
a single, legally binding investment agreement.
Countries like China and Canada have demonstrated that
African governments are ready to sign these agreements,
including major economies like Nigeria. While our peers and our
competitors have been busy inking investment agreements, USTR
has been pursuing ineffectual, non-legally binding trade and
investment framework agreements. It is time that we focus and
stop allocating very scarce government capacity and resources
to these inconsequential talk shops and start pursuing real
agreements that catalyze much-needed investment flows to the
Continent.
Thank you very much.
[The prepared statement of Mr. Leo follows:]
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Chairman NUNES. Thank you, Mr. Leo.
Mr. McRaith, you are now recognized for five minutes.
STATEMENT OF WILLIAM C. MCRAITH, CHIEF SUPPLY CHAIN OFFICER,
PVH CORP.
Mr. MCRAITH. Thank you, Chairman Nunes, Ranking Member
Rangel and distinguished Members of the House Ways & Means
Trade Subcommittee.
On behalf of PVH I want to thank you for allowing me the
opportunity to testify in front of this Committee. I have
already submitted my written copy for you to read. I am going
to talk from these points and try to remain focused on them.
So my name is William McRaith, Chief Supply Chain Officer
for PVH. I also sit on the board of the American Apparel and
Footwear Association. And color on PVH--PVH is one of the
largest apparel companies in the world. We are headquartered in
New York with distribution sales in other corporate locations
in multiple states across the U.S., including Georgia, North
Carolina, New Jersey, New York, Nevada, Pennsylvania and
Tennessee. Among others, our company brands include Calvin
Klein, Tommy Hilfiger, Van Heusen, Arrow, Warner, Izod and
Speedo, and we are directly responsible for 16,000 jobs within
the U.S.
PVH is a dedicated, global corporate citizen. Outside of
the U.S., we have 3,000 retail locations and provide more than
14,000 additional jobs. My message today is quite simple. Many
parts of Africa are ready. They are primed to receive large
investments that will generate economic growth envisaged by the
AGOA founders. To get there, though, AGOA must be renewed as
soon as possible, and for an extended period of time, including
its third country fabric provision. With the right approach,
Africa can become a vertically-integrated sourcing region for
the apparel industry and generate thousands, tens of thousands
of jobs and added value to their economies.
AGOA was the right trade policy 15 years ago, but it was
ahead of its time for business community and for Africa to be
able to fully utilize it. However, we are now seeing more
mature and democratic countries, better and lasting
infrastructure and more meaningful, economic and educational
reforms starting to take root. Congress must send an
unequivocal signal to the investor and business community by
promptly approving a lengthy extension of AGOA.
Just a very quick story of our own: In April of this year,
PVH together with several of the largest apparel companies,
textile manufacturers and stores conducted an exploratory
business mission to this region. I would say many of those
companies that went with us were skeptics. They were cynics.
They really did not believe it was ready for this type of
investment.
After visiting sites, looking at infrastructure, and
meeting with ministries from different countries, our business
delegation came to the realization that some African countries
had already laid the foundations necessary to attract
significant foreign investment and were prepared to undertake
the commitments necessary to secure socially responsible
investors. What we saw in Africa reminded us all of some of the
current production powerhouses we are in today and what they
looked like 20 years ago. There is great excitement among the
apparel business community about this very near growth
opportunity in Africa.
African nations are on much more of a course than just to
become pure seamstresses. They can become the world's very
first example of how to proactively build a fully vertical,
socially compliant, human rights compliant, ground to finished
product supply chain. Africa can invest, attract the investment
in other added value processes, such as cotton growing, yarn
spinning, weaving and logistics. Countries in Africa will also
be the beneficiaries of a more inclusive model of investment
and growth in which socially responsible companies like PVH
will be able to put in place right from the very beginning
facilities, norms and values that will guide the work at the
factories and the relationships between workers, managers,
associations, civil society groups, governments, and any other
stakeholders.
I see my time is a little bit short. I only have three more
points to make. So if I can just quickly move through them, the
U.S. can help us in many ways.
One of those: programs that will help increase the quality
and yield of African cotton, vocational and educational
programs to help train workers and management, projects that
help build interregional connectivity for goods to transit the
Continent seamlessly will enhance the attractiveness of the
region.
Aside from a lengthy AGOA extension, one way to the
additional certainty for the business community is by extending
the Third Country Fabric Provision for a reasonable period of
time and allow the growth of the investments that will make
this Third Country Provision no longer necessary. As someone
who has been involved in global operations for over three
decades and recently had to ponder the question of where is the
next growth region for the next 20 to 30 years, I believe that
we now have the answer. It is Africa.
We must not lose a moment in this tremendous opportunity
for Americans and for Africans alike. To make it happen, AGOA
must be renewed soon and for a lengthy period of time. In
addition, Congress and the Administration must continue to work
hand in hand to improve and facilitate the creation of programs
that will strengthen the Africa region. We look forward to
working with the Members of this Committee, other Members of
Congress, and with the Administration in this worthwhile goal.
Thank you, Mr. Chairman. Apologies for the time.
[The prepared statement of Mr. McRaith follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman NUNES. Thank you, Mr. McRaith.
Mr. Schneidman, you are now recognized for five minutes.
STATEMENT OF WITNEY SCHNEIDMAN, SENIOR INTERNA-
TIONAL ADVISOR, COVINGTON & BURLING LL; NONRESI-
DENT FELLOW, AFRICA GROWTH INITIATIVE, BROOKING
Mr. SCHNEIDMAN. Chairman Nunes, Ranking Member Rangel and
distinguished Members of the Committee, it is an honor to
testify before you today.
On the eve of the African Leaders Summit, the moment could
not be more timely to be considering the renewal and
strengthening of the African Growth and Opportunity Act. I will
briefly discuss several critical issues related to AGOA, but
first it is important to note that AGOA is the cornerstone of
the U.S.-African commercial relationship, and it provides the
U.S. with a strategic advantage on the continent.
Over the course of the last 14 years, AGOA has led directly
and indirectly to the creation of several million jobs. For a
continent of one billion people, where the median age is 17,
this is a significant contribution to economic growth, social
stability and the emergence of a middle class with a strong
appetite for American products and brands. There is also a
strong affinity with the way in which American companies do
business in Africa in terms of skills development, technology
transfer, career enhancement and respect for rule of law and
anti-corruption practices. It is in our strategic interest,
therefore, that a renewed AGOA contributes to a deeper U.S.
commercial engagement in Africa, while also encouraging more
experts from beneficiary countries. As for the most critical
issues, let me start with the timeframe.
Most Americans have what might be referred to as a pre-
dial-up perception of Africa. In other words, their views of
Africa continue to be informed by the Cold War, before the
Internet when coups, conflict and corruption were rife. There
is little appreciation for the rapid growth, the significant
improvement in governance and the emergence of a middle class
on par with that of India and China. In order to change how
American companies view Africa, there can be no higher priority
than creating a framework of stability and predictability for
entering the African market. The same is equally true for
African and other companies navigating the complexities of
exporting to the U.S. market under AGOA. All of them need
assurances of a stable and sustainable set of commercial rules.
For that reason, I support the African Union in its call
for a 15-year extension of AGOA from 2015 to 2013 (sic). Now,
many American companies, especially small and medium companies,
need support to be successful in Africa. African companies
generally need assistance to fund buyers in the U.S. and comply
with U.S. regulations. The architects of AGOA anticipated some
of these problems and created three trade hubs, not only to
help African companies enter the U.S., but also to facilitate
American companies.
The architects of AGOA anticipated some of these problems
and created three trade hubs to help African companies utilize
AGOA. The time has come, however, to redefine the role of the
trade hubs. They need to be restructured into trade and
investment hubs, so they not only help African companies enter
the U.S., but also facilitate American companies to capture
market share on the African continent. To do this, the newly-
fashioned trade and investment hubs should become one-stop
shops where the trade promotion activities of our embassies,
officials from the Departments of Commerce and Agriculture,
ExIm and OPIC, are closely aligned on a daily basis in support
of enhancing the U.S. commercial presence on the continent. For
this to happen, the Administration would have to commit to a
``whole of government'' strategy for trade promotion in Africa,
which unfortunately has been lacking.
Congress would have to play its part and make the funding
available. This should be pursued with a sense of urgency,
given the competitiveness of companies from China, India, the
EU and elsewhere in Africa. Now, it is often said that
``Capital is a coward,'' which explains why Africa accounts for
only one percent of U.S. investments world-wide, which is a
shockingly low number. As part of a reauthorized AGOA, Congress
should establish a tax incentive to help change the risk-reward
ratio for American companies by reducing the tax to zero on
repatriated income by U.S. companies who make new job-creating
investments in supply chain products in agriculture,
manufacturing, apparel, technology, clean energy and other
relevant sectors. Congress and the Administration would reduce
the risk for American companies to invest in Africa.
I would just like to touch on one or two more points
quickly, as I see my time is running out. No issue is as
central to Africa's accelerated economic development as
regional economic integration. The U.S. has largely understood
this, but we can do more to facilitate the flow of goods,
services and labor across Africa's borders. The principal
challenge to regional integration comes from an unlikely
source, and it is the Economic Partnership Agreements, which
the European Union is compelling African governments to sign by
October 1st, or African governments face losing their
preferential access to the European market.
In fact, the EPAs threaten to undermine much of the
progress that has been made on regional integration, as they
would give European goods and services preferential access in
an African country over goods and services from a neighboring
African country. They would also discriminate against American
companies and products. The EPAs present a significant
challenge to the U.S. as the U.S. is poised to negotiate
regional free trade agreements throughout Africa, while we are
discussing today the extension of a non-reciprocal trade
benefits program with 40 countries on the continent. While it
is essential that we renew AGOA, we should address this issue
of this profound asymmetry.
Last year, the U.S. exported $24 billion worth of goods and
services to Africa. This translates into support for more than
130,000 jobs in the U.S. So our relationship with Africa is
changing from one of donor/recipient to one of mutual gain and
benefit. Under AGOA in 2013 the U.S. imported nearly $5 billion
worth of non-oil, largely job-creating goods, almost four times
the amount in 2001. In both respects, these trends are
encouraging; but, with a 15-year extension of AGOA, these
trends can become much, much stronger.
Thank you for the opportunity and the extra time.
[The prepared statement of Mr. Schneidman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman NUNES. Thank you, Mr. Schneidman.
Because of the Ranking Member's long-time concern about
AGOA, and he's really been the champion in Congress, I am going
to yield my time to the Chairman so he can get into the
questions.
Mr. RANGEL. I can't thank you enough for your courteous
consideration, and I want to thank the witnesses for their
contribution. Legislatively, time is not on our side this year,
and we have a lot of things to consider as to whether or not
the 15 years--even though it would give investors some degree
of continuity, we certainly don't want to put these countries
in a box that we can't revisit and see what changes have to be
made.
We also know that the Third Country Origin of fabric is the
easiest way that a lot of them want to go, but we also know
that we want to provide incentives so they would not have to go
outside of these countries. And the Congress, as you all know,
we have separated two different committees and subcommittees.
And most of the testimony appears as though you think our
Executive Branch is that separated too. And I want to get
whatever suggestion you can make.
Here we are, a country trying to maintain peace and
economic stability in the world and we have an opportunity of
people who are basically friendly to us. They are in need. They
want to trade, and whether or not it's bilateral or whether
it's not this broad, which agency do you think would be the
best to coordinate these activities; so that, whether we are
talking about diplomacy, whether we are talking about security,
whether we are talking about education, whether we are talking
about electricity and infrastructure, when a patient is sick,
they don't want to know the specialist. They want to know
generally ``what are you doing to help me''. And everything
that you said, it sounds like all of us would say we wish we
had thought about it, but our Committee does not have the
expertise. We don't have the experience to know how to go about
this, even though we are there to provide the tax incentives
and the structure.
So, could you--any one of you--suggest to us a sense we
cannot do it this year? A lot of us will be attending the
conference. We will have very little input, because it's an
executive conference, even though we will have the opportunity
to talk with the representatives of these countries. What could
we recommend to our Executive Branch as a result of this
hearing, which the Chairman called, so that we would have the
hearing before the summit? We won't be able to tell them we
have a treaty to be signed, but we should be able to tell them
something before they tell us.
What recommendations, Mr. Leo, since you had four points?
Who would coordinate, assuming they all made sense like I did,
what agency, and certainly what would be the USTR?
Mr. LEO. Thank you, sir, for the comments and the question.
I agree with you with the point in terms of a need for very
close coordination and a strategy to be developed, implemented,
monitored with a single agency on the hook for accountability.
And given the breadth of the issues that are very important and
influential to all the matters that we are talking about, and
so the fact that there are so many different government
agencies that have a small, little piece, sometimes a medium-
sized piece, I think, given that, it has to be driven out of
the White House within the Executive Branch. And as a person
who served at the White House in the past on the National
Security Council, I can understand how that vehicle is
required. So I think it has got to be the White House that
drives it.
USTR can be the lead on a couple of the issues. They can
lead, along with the State Department, on bilateral investment
treaties. They can lead on AGOA. USAID and MCC can lead on some
of the softer trade capacity building assistance, but what we
have right now is a lack of an over-arching strategy that has a
continental, regional, and country-specific approach to it. So
I think, first, White House needs to be the driving force; two,
needs to have a strategy including on trade capacity
assistance; and then, three, have within at least the Executive
Branch, budgetary authority attached to it.
Obviously, Congress will have the final say on where the
money comes and goes, but within the request needs to have some
data authority attached to it, because money is what is going
to drive things on a lot of these vehicles. And then lastly, at
the country level, I think the U.S. Ambassador needs to be in a
position to approve all of the government agency actions that
involve this agenda, and that's hit or miss right now.
Sometimes that happens, but I think the Ambassador has got to
be the final say for country-level activity. But back here in
Washington, it has got to be driven by the White House.
We haven't had that these last 14 years, and we need to
have that going forward, whether it is investment trade and
policy as well as trade capacity building assistance.
Mr. RANGEL. Thank you.
Mr. Chairman, after the Members have all had an opportunity
to inquire, I would like to hear from the other two witnesses.
Thank you so much.
Chairman NUNES. Thank you, Mr. Rangel.
Now, I recognize Mr. Reichert for five minutes.
Mr. REICHERT. Thank you, Mr. Chairman. Sorry I missed some
of your testimony. We all have other venues we have to run to
and come back to. I want to follow-up, I think, on a little bit
of what Mr. Rangel was talking about. I am guessing I am going
to be heading in the direction of some strategies, but specific
to a certain issue of growing exports. So I support a timely,
seamless renewal of AGOA, and all of us do.
In recent years some countries have begun to develop AGOA
export strategies that identify measures that could be taken to
promote a greater use of AGOA benefits. An example of that
would be Kenya has developed a national AGOA strategy focused
on diversifying its exports, easing barriers to exporting, and
further strengthening ties with the United States and U.S.
businesses. Specifically, this includes looking at ways to
improve infrastructure, increase exposure by raising the
profile of Kenya products, and reduce burdensome regulations.
The problem is that most countries still don't develop
these strategies or look at AGOA strategically. And you
mentioned some of your strategic issues, continental, regional,
country, the Ambassador's involvement and the involvement of
the President. And I'm guessing that all of those components
certainly would apply to helping in this arena. Is there
anything that is more specific to encouraging other countries
to sort of follow the pattern that Kenya has sort of presented.
Anyone?
Mr. SCHNEIDMAN. Thank you very much for that, I think, very
important question.
The annual U.S. AGOA forum, I think, provides a great
opportunity for every country to come forward with their
national AGOA export strategy, and I think we have seen where
certain countries, you know, are using the Internet much more
effectively, and certain governments are using the Internet
much more effectively to post contracts in national resource
sector. And I think that we can make a concerted effort in our
dialogue with AGOA beneficiaries, not only to have the develop
national strategies on AGOA exports, but to post them on the
ministries of trade.
And maybe they can also be posted on AGOA.gov, our UST, our
website. And if these AGOA strategies are developed in the
right way, the result of a consultation between local, private
sector, civil society government, other stakeholders, I think
they could be terribly effective. So I would like to see over
the next two or three years that every AGOA beneficiary come
forward with a national strategy that we can understand and
that we can measure progress against.
Mr. REICHERT. Other comments?
Mr. LEO. Yeah. I would add one or two things to that. I
think underlying your excellent question is African governments
have the ultimate responsibility to come forward with their own
strategies that will build upon and seize the opportunity of
preferential access to the U.S. market. And within that, I
think the U.S. Government should be prioritizing its engagement
and its very scarce assistance dollars on those governments
that have demonstrated a strong commitment to reforms and
action. So in the case of Kenya coming forward with its
strategy and hopefully taking very concerted actions as well, I
think that is a great indication of a strong partner for the
U.S. to engage with and support through a variety of different
tools. So I think the first action has to come from African
governments.
Within that context on our side, going a little bit further
than what I mentioned before, when we are thinking about trade
capacity building assistance, I think there is a great
opportunity to work within these strategies, and, if required,
to supplement them with constraints analysis--growth and trade
constraints analysis. I mentioned the political will to
implement reforms. I have to look at that, opportunities at the
sector level for greater trade as well as the ability to
attract investment.
I think it's those kinds of things that need to be guiding
principles when we are determining where scarce resources
should go. But it all needs to flow from governments stepping
up and coming forward with strategies, but, more importantly
than strategies, action.
Mr. REICHERT. Thank you very much, Mr. Chairman. I yield
back.
Chairman NUNES. Thank you, Mr. Reichert.
Mr. Neal is recognized for five minutes.
Mr. NEAL. Thank you, Mr. Chairman.
Mr. Rangel and I, I think, were the only two here when this
was actually signed into law, and we were the original
supporters of AGOA. And the result has been encouraging, not
just on the engagement front, but on the economic playing field
as well. It has been estimated that there have been 1.3 million
jobs created in Sub Saharan Africa, and U.S. trade with AGOA
nations has grown by 300 percent from 7.6 billion in 2001 to 24
billion last year. But there remain significant barriers to
trade with Africa, including high tariffs, forest localization
requirements, legal restrictions on investment and custom
barriers amongst other issues.
I think that there will be an opportunity when we look to
extend AGOA to address some of these issues in a vigorous
manner, but Dr. Schneidman, let me speak specifically to a
question you raised in terms of how repatriation might spur job
creation. As you know, that argument over repatriation has been
offered in a flattened, round manner in this town for a
considerable period of time, and it is in the background and
much of the public debate.
Many argue that repatriation would rescue a lot of money
that is sitting offshore with tangible assets that could be
better used here at home. But there's another debate as well
that corresponds to it, suggesting that essentially if we do
any sort of repatriation right now, you will never get tax
reform. People will just write, once again, for a tax holiday,
and inversions will continue to move along at the pace that
they are currently embracing.
So I would give you some time to explain your repatriation
proposal.
Mr. SCHNEIDMAN. Congressman Neal, thank you very much for
that very important question. You know, this is an idea that
actually a number of us have been considering for a long time
and there are several components to the answer.
One, I think we should think of a tax credit, a tax
incentive as a spur to economic development in Africa, much
like in Puerto Rico in the 1990s. We used a tax incentive to
attract American investment there. I think the same dynamic
would occur in Africa. There are going to be some 40 million
jobs shifting from China and elsewhere to Africa by 2040, and I
think U.S. companies need to be part of that. And if we go to
zero on a tax incentive, that would be a signal to the tens of
thousands of American companies who continue to see Africa as a
continent in crisis, that there is something different going on
there.
And I think that would help American companies get into the
game on the Continent in a very constructive way. And if they
start making investments in agricultural investments, in
manufacturing, in technology, I think that will have profound
implications for economic development in Africa and I don't
think it would be zero sum for the United States. I don't think
it would be taking jobs away, and it would provide an
incentive, not only to invest, but if it's invested in a job-
creating project on the Continent, it generates a profit. That
money comes home and it is used constructively to invest in
jobs here. I think that is a win-win, and I think we have to
move to a new paradigm.
We have that opportunity now, with the reauthorization to
ask the question, how do we get more U.S. investment into
Africa. And I think we do that by lowering the risk and
increasing the return for American companies, and I think that
would be the kind of incentive that would help American
companies transfer technology, create jobs, deepen our
connection with a continent that is rapidly emerging, and a
continent with whom we have little contact and with whom we
should have much, much more. So I think it would cost fairly
little.
We have done some studies on that and I think the return
would be quite significant, and it would build on the good
trust that we have with many African governments. And they
would see that we are truly committed to moving to this new
relationship, one of mutual benefit where we can talk about a
mutual partnership in a number of areas, not only economic
development.
Mr. NEAL. Thank you, Mr. Chairman.
Chairman NUNES. Thank you, Mr. Neal.
Mr. Buchanan is recognized for five minutes.
Mr. BUCHANAN. Thank you, Mr. Chairman. And I want to thank
Chairman Rangel for his leadership. I notice you have put a lot
of energy, as the Chairman mentioned. So I appreciate your
effort, and I agree with you. It is nice that we can find a way
to come together once in a while. I like that for the sake of
America.
Let me just mention we all have seen the numbers about the
jobs and the three-fold growth. I have had an opportunity in
the last, probably couple, three years. I have been in 10
different African countries, most of them that have AGOA. And
the general feeling over there is there is not a lot of
enthusiasm on their side. You know, frankly, there is not a lot
of enthusiasm on our side. I think this has to be looked at in
a much broader context.
We need to really engage the Administration, get more
involved. I had met a couple of equity companies from New York
that were in Ethiopia that were doing very well. They were in
cement and block. They don't have access to capital. And, as
you mentioned about China, it was my observation--pretty much
every country I was in--China was building facilities,
primarily palaces and government facilities for a lot of
different places all over Africa. It was pretty universal from
that standpoint.
We are making a commitment more in terms of healthcare and
other things that we are involved in, but I think it is an
enormous opportunity. I think three times the amount of growth,
from eight billion to 25 billion, is not exceptional. I think
there is a real opportunity to go forward, but we really need
to take a look at AGOA in general. I can just tell you, and
like I said, I don't mean to be redundant, but it was pretty
universal, talking with a lot of heads of states and business
people over there. They liked it, thought it was okay, but not
great, and I think we really needed to take a look at what more
we could be doing.
So my question I guess to all the panelists is what are a
couple of things that you would recommend that we might do
going forward to make the difference, to bring some more
enthusiasm. Because I would like to see us build a better
partnership with Africa, and there's other countries, like
China and others that are fully engaged over there. And we
don't want to find ourselves in five or ten years in third
place.
So, Mr. Leo, what are your thoughts?
Mr. LEO. Thank you, sir, and I think you raised what is a
very core, fundamental question about our U.S. policy towards
this very strategic and dynamic region. In direct response to
your question, I think there is a couple of things that we
could do that would bring our engagement and our relationship
to a higher level.
First, before going into the specifics, though, first, it
is not surprising that you have heard from the heads of state
that you have met with about the need for economic engagement.
When you look at existing surveys of ordinary African citizens,
over 70 percent of them across the continent cite economic-
related issues as their most pressing concerns, that they want
to have their governments focus on. And as you would expect as
related to that, there were external partners, and this is the
issue African leaders are totally focused on it. So as a
result, along with the very significant opportunities now and
in the future, this is where we should be focusing our
attention much more than we are today. So, what are the pieces?
One, I think a seamless extension of AGOA. I think that is
pretty straight-forward. I don't think there is a lot of
controversy on that. Two, the pieces that I mentioned before in
terms of making our trade-related assistance much more
strategic and focused on the most pressing constraints to a
firm's ability to be globally competitive; three, following the
leadership out of the House with the Electrify Africa Act,
focusing on those kinds of constraints; and, with that, the
reauthorization of the Overseas Private Investment Corporation.
If African governments and leaders and businesses are focused
on attracting investment, OPIC is one of the best ways to do
it.
We need the Senate to move on the Energize Africa Act,
which will do a multi-year reauthorization, but also give OPIC
additional tools. They don't need more money. They don't need
more appropriations. They need more flexibility and tools to be
more effective and scaled. So I would unleash OPIC as another
piece.
I mentioned bilateral investment treaties. That's another
tool that is very low cost. It is basically staff and travel
expense to be able to do this. It is not billions of dollars.
Witney had mentioned the risk profile. Well BITs are one
way of addressing that issue at almost zero cost to taxpayers.
Mr. NEAL. I would like to get some additional comments, Mr.
McRaith.
Mr. MCRAITH. Yes. So it is a great question and I don't
want to kind of undermine the discussion that has just been
had; but, what I would maybe go back and focus on is the fact
that we are at a moment in time today that is different to
where we were 15 years ago. So you could say AGOA failed. I am
not sure what the appropriate terminology is.
If you look at my industry, the apparel industry, we failed
$24 billion worth of AGOA-driven trade, only of which 900
million of it is from the apparel sector. A labor intensive--in
fact, generally the first mover, most labor intensive industry
in the world, and it has typically led the way into most
developing countries. The time is now. It wasn't right 15 years
ago. It is right today. So it will be the private sector that
actually drives most of this, and we need the on-the-ground
ambassadors who, in Ethiopia, were incredibly supportive of the
work we did there on a recent trip in Kenya, similar in Uganda.
So I think that we have got to help the nations shake off the
old AGOA, because I think they languish in it. It didn't work.
There is no energy around it. You go to Africa. China is
present everywhere.
Mr. NEAL. Everywhere.
Mr. MCRAITH. Europe is present everywhere. America is MIA
at this point. We are missing in action.
Mr. NEAL. That's my point, I think.
Mr. MCRAITH. But renew AGOA, because everyone is looking.
Everyone is ready to go. However, when you think of September
2015 as the renewal date, the renewal date is today, because it
takes us a year to figure out what we are doing there. We are
ready to go. We are ready to go. We are ready to move, and this
is sitting right in front of us. And, quite frankly, if we do
not renew AGOA, it is not about the timing of entry. It is
about the exit.
Mr. NEAL. We are probably out of time, but that was good.
Do you want a quick comment?
Mr. SCHNEIDMAN. Yes.
Chairman NUNES. Just quickly, Mr. Schneidman.
Mr. SCHNEIDMAN. I will tell you, Congressman. Let me just
mention two things. One, I agree fully with the comments right
here that we need to get the framework done in place. Renew
AGOA as quickly as possible. My second point is I think we have
to stir people's imagination, and that was done on Sunday when
the U.S. African development foundation gave 36 grants of
$25,000 each to the Washington Fellows who are here as part of
the Young African Leadership Initiative.
We need to take that to scale, and I think if we can be
seen as catalysts of entrepreneurship, catalysts of innovation,
that's what America does best and that is what Africa is so
thirsty for. So I think we can play it a number of different
levels at the same time, but we just have to get going to do
it.
Mr. NEAL. Thank you.
Chairman NUNES. I thank the gentleman.
Mr. Blumenauer is recognized for five minutes.
Mr. BLUMENAUER. Thank you very much, Mr. Chairman, and I
appreciate the way that you and Mr. Rangel have organized this
hearing. I am sorry I was called away from one, but I had a
chance to review the testimony.
I appreciated, Mr. McRaith, your reference to
sustainability, and there was some acknowledgment of
environment. But I want to seek feedback from each of you,
because my limited involvement with the African continent, I
have only traveled there a few times. Although I did get quite
an experience through the eyes of my daughter who was a Peace
Corps volunteer for two and a half years, and then traveling
with her, watching it from the other side, and the
conversations I have had with elected officials from Africa.
I am deeply concerned that we use this as an opportunity to
put a focus on sustainability, on environmental protection,
because some of the most egregious practices imaginable are
taking place, and we are watching. I think the case is clear
that there is going to be rapid economic development and there
should be. And we certainly are not interested in holding
people back, but there are alternative paths. And I would just
appreciate any of you elaborating on this point, about how we
should approach this agreement as a vehicle to highlight
sustainable environmental practices, be able to incent the
right things, and perhaps a signal to not engage in some of
this destructive behavior that we are seeing.
Mr. MCRAITH. So, Congressman, maybe I can take a response
to that. So, again, I am going to focus my response around what
we refer to as the EAC and Ethiopia, so the Northeastern Region
of Africa. And, you know, so there are some givens on
sustainability. You are looking at countries between Ethiopia,
Kenya and to some degree into Uganda. And I know Ethiopia is
not part of the EAC, but hopefully will be soon, countries that
are virtually 100 percent sustainable energy today, either
hydro, wind, or eventual thermal energy that they will have put
into place. So already I would say they are ahead of many
countries in these manufacturing powerhouses that exist today
in the term ``sustainable''.
What I would also say is for 30 years from the demise of
the European and U.S. manufacturing base for the last 30 years,
companies like ourselves and those partners that we work with,
we've had successes and we have had many failures. But we have
learned from every one of those. And, you know, its
sustainability, just corporate social responsibility of which
sustainability is a part, was a major theme of the trip that we
were on.
In fact, we had the opportunity to meet with the presidents
of Uganda and Kenya and the Prime Minister of Ethiopia, and the
simple question that we asked them was in 10 years from now how
do you want people to perceive the brand of your company? So
when people say ``Brand Ethiopia,'' how will they talk of Brand
Ethiopia? Because the decisions you make today are going to
determine how people think of it in 10 years. And we have
processes in place today, the accord and the alliance.
In Bangladesh, we are retroactively trying to correct some
of the things that were not done appropriately, by engaging,
but--not by stepping back and saying there are issues we can't
engage, but by actively engaging in bringing the right socially
responsible partners to the table. Again, I would argue this
will become a showcase in the world as to what sustainability
could look like, what human rights compliance could look like,
but we will do it through our presence.
Mr. BLUMENAUER. I see my time is almost expired, but I
would welcome elaboration from any of you on those elements,
notwithstanding, for example, in Ethiopia where they are
aggressively pursuing hydro. I mean there are lots of practices
there that gave me pause, and that didn't appear to be
particularly sustainable, notwithstanding the energy.
If there are elements that you see going forward with the
agreement in a way that we can provide the right signals and
incentives, as well as we've been doing a lot of work with
illegal logging and having some problems with Peru these days--
we thought we had worked out in the Peru Free Trade Agreement.
Thoughts that you have that could be incorporated here would be
deeply appreciated.
Thank you, Mr. Chairman.
Chairman NUNES. Thank you, Mr. Blumenauer.
Mr. Smith is recognized for five minutes.
Mr. SMITH. Thank you, Mr. Chairman, and thank you to our
witnesses for sharing your time and expertise with us today.
And I don't want to repeat this among the items that have been
addressed by my colleagues. I certainly do want to add,
perhaps, emphasis that I am encouraged by various efforts that
can hopefully build more capacity. And I think there are great
opportunities for the future here. And as we do work through
the customers' challenges and so forth, I am just wondering
about some additional barriers that exist, specifically, with
South Africa, Nigeria, and members of the South African
development community as it relates to unscientific sanitary
and phytosanitary and other tariff or non-tariff barriers to
agriculture, our agriculture exports. Can any of you reflect on
that a bit?
Mr. SCHNEIDMAN. If I may, Congressman, this is an issue
that we have looked at carefully, and I think there is a
feeling among a number of our poultry producers, for example,
that South Africa does practice unfairly--has unfair practices
as it concerns U.S. poultry products going into the country.
And this is a problem, and I think we really need to engage the
South Africans in a very sustained and serious way so that we
can level the playing field, because South Africa is a very
important partner to the United States.
We tried to develop a free trade agreement 2003, 2006, and
it didn't work. South Africa has free trade agreement with the
EEU, and it suggests to me that we really haven't--we haven't
sorted out our relationship. So there are a number of issues,
and I would like to see us really take a step back, engage in a
sustained exercise between the U.S. Government and the South
African Government, to really chart what our commercial future
looks like and how we get sort of a ``post to go on''
relationship. Because I think it is going to start there, and
we haven't done a good job to really embrace that challenge.
Mr. SMITH. Okay. Mr. Leo, in your testimony, you mentioned
that preferential access under AGOA should be contingent on
noticeable economic improvements. Would you suggest that these
improvements would include ironing out these disputes based on
the sanitary, SPS, if you will, standards or various trade
policies relating to that?
Mr. LEO. Thank you, sir, for the opportunity to comment on
this. In full transparency, I am not intimately familiar with
this set of issues related to South Africa. In terms of the
eligibility requirements, though, more broadly, I think there
is a couple of guiding principles that should be applied if
Congress decides and the Executive Branch decides to go in this
direction. I think it needs to be real and transparent in terms
of the principles that would be applied to all countries and
would be tracked by third-party data that's public. So in
essence it is apolitical in terms of, action has either been
taken or it has not been taken. And then along with that there
would need to be a transition period so that African
governments actually have the opportunity to address any of the
issues that are being tracked and then implemented in the
country determination process.
Whether the issues that you raised should be a part of
those specific criteria that are related to the business
climate or other operating climate issues could be debated,
could be discussed and maybe adopted later. At this point, I
focus more in terms of what the guiding principles should be
with specifics that could be fleshed out later, if the
``parties that be'' decided that this is a sound way to go,
which I believe it is in general terms.
Mr. SMITH. Sure. And I would very straight-forwardly
suggest that the more we can stick to the scientifically based
standards, the better off everyone is, whether it is consumers
in another country who would consumer our products that are
safe. We do want to focus on these standards that we have been
able, I think, to achieve some progress in ironing these things
out with some other countries. But it is something that I think
needs addressing, and not just with this issue, but others too
as we do move forward.
Thank you, Mr. Chairman. I yield back.
Chairman NUNES. I thank the gentleman.
The gentlelady from Kansas, Ms. Jenkins, is recognized for
five minutes.
Ms. JENKINS. Thank you, Mr. Chairman, and thank you all for
being here.
The Peterson Institute forecasts that the Trade
Facilitation Agreement could add 500 billion to the GDP in
developing countries; yet, India and certain African countries
have balked at implementation. For Africa, in particular,
implementation of the TF agreement holds potential to reduce
barriers to intra-African trade and to promote Africa's
integration into global supply chains.
We are all watching the upcoming implementation deadlines
and hope all countries promptly and fully adopt the TF
agreement. And, gentlemen, I would just be interested in how
would implementation of the TF agreement promote regional
integration in Africa and help to address supply side
constraints.
Mr. Leo.
Mr. LEO. Thank you. Thank you for the question, and I think
it is a really big, important issue. And right now I think it
is a quite difficult issue in terms of where those negotiations
are and where some of the positions are.
I think within the trade facilitation agenda, everyone
agrees that it is critical for the issues that you talk about
as well as U.S. businesses to be able to operate. Whenever I
talk to U.S. businesses, this is actually their number one
issue that they want to get focused on. So I think it would
have a big impact. I don't have any great ideas in terms of how
we want to get from where we are now to where we need to be
beyond some just general points about needing to engage with
all of the major players who are driving the continental
positions that are feeding into the WTO and some of the back
channel discussions. But it is an issue that needs to be put
behind us as quickly as possible so we can focus on the
substance and addressing some of the underlying issues that are
holding back or constraining opportunities now and in the
future.
Ms. JENKINS. Any of you have any additional thoughts?
Mr. MCRAITH. Yeah. So I will give it from an Apato
perspective, you know, because one of the challenges--we often
refer to Africa in some cases as if it was a country, and it's
clearly a continent of significant size. And what we see within
Africa is we see different trade blocs emerging, COMESA, the
East African Community, SADIC, has been in place for some time,
and we continue to see the growth of those trade groups. And
our own encouragement--and again I'd go back to the discussions
that we have been having there--is how do we now think of
Africa's regionalized, regional locations that include multiple
countries that allow trade to flow freely in any direction, so
across-border trade, unrestrained, untaxed, no-duty.
What I would tell you is from our perspective in Northeast
Africa, we were struck at the level of the commercial
ministries and just how focused they were on resolving these
cross-border trade negotiations. So we walked away with the
rest of the group, highly encouraged where all of Africa might
have free trade movement within their collective regions. This
was going to be solved and addressed; and quite frankly with or
without us, it was going to be addressed.
Ms. JENKINS. Okay. Mr. Schneidman?
Mr. SCHNEIDMAN. Thank you for the question. I have just a
brief comment. And it is: I think we need to make progress. We
need to move forward in areas where we can make progress. The
Administration has proposed a trade and investment treaty with
the East African Community, and I am hopeful that we are able
to conclude that very soon, and then that becomes a model. The
benefits of that relationship becomes a model to other regions
on the Continent, that hopefully would provide an incentive of
the benefits of working more closely with the United States,
because I think that is a most effective demonstration of what
the U.S. has to offer as a trading partner.
Ms. JENKINS. Okay. Thank you. I yield back.
Chairman NUNES. I thank the gentlelady.
The gentleman from Indiana, Mr. Young, is recognized for
five minutes.
Mr. YOUNG. Thank you, Mr. Chairman, for your leadership on
this issue. Ranking Member, I appreciate your longstanding
interest and leadership on this issue as well.
Chairman NUNES. If the gentleman will yield, I forgot to
introduce you also that you will be representing our Committee
at the AGOA meetings next week. And I want to thank you for
that, representing the Republican side.
Mr. YOUNG. Happy to do it, and I found your testimony here
today quite instructive in preparing me for visiting with some
of these African dignitaries in getting some more context and
texture with respect to reauthorization. Also in addition to
that duty and responsibility, which I am happy to have, I am a
co-chair of the Transatlantic Trade and Investment Partnership
Caucus here in Congress. So on a periodic basis, I will visit
with European leaders, diplomats, trade ministers, and so
forth, with a few of my other colleagues.
So the intersection of U.S.-EU relationships, trade
relationships, U.S. African trade relationships to me is quite
interesting; and in fact we are having a TTIP caucus meeting in
less than an hour. And so my line of inquiry here is directly
related to that subject matter. In recent years, the EU has
pushed African countries out of its own unilateral preference
program and into reciprocal, bilateral trade agreements. The EU
calls them economic partnership agreements. Of particular
concern, the tariff preferences and the EU South Africa EPA
have largely entered into, force--In U.S., exporters are at a
significant disadvantage in losing market share.
The EU is pushing EPAs with many other AGOA members that
would further disadvantage U.S. exporters. While Congress has
never required that AGOA countries provide reciprocal access to
U.S. exports, the fact that some are now offering this
preferential access to the EU, but not the United States has
raised serious concerns.
Mr. Schneidman, what can we do to address the EU's actions?
Mr. SCHNEIDMAN. Thank you, sir, for I think one of the
central questions in U.S.-African and U.S.-EU trade today. I
firmly believe that this should be a topic in the U.S.-EU
dialogue in the TTIP negotiations. How is it that we are
offering the Europeans to create the largest free trade area in
the world, when they are basically compelling African
governments to accept these EPAs that basically shut us out of
the African market?
That is a pretty stark dynamic that is in place, and I am
just stunned that the Administration really hasn't embraced
that more. And I think, really, we need to start with EU,
because there has been a lot of opposition in Africa to these
EPAs. And many of the African governments really have had no
choice but to sign on to these.
Mr. YOUNG. Right.
Mr. SCHNEIDMAN. So I think, you know, we need to engage the
African governments as well. I think we need to do this in the
U.S.-EU context, and a U.S.-African context, but it just stuns
me that we are talking about offering a non-reciprocal benefits
to Africa at the same time that the EU is talking about a
reciprocal relationship. And to Africa's benefit, I think it
should be harmonized more directly, and I think the first place
to start is in the TTIP negotiations.
Mr. YOUNG. Mr. Leo, do you have anything to add to those
remarks?
Mr. LEO. Yeah. Congressman, I don't have a whole lot to add
beyond what Witney mentioned.
One of my colleagues at the Center for Global Development,
Kimberly Elliott, has spent a lot of time looking at exactly
these sets of issues. And, if you are amenable, I am sure she
would be very pleased to follow up with you with additional
thoughts as well.
Mr. YOUNG. Okay. Well, I thank you all for being here, and
I yield back.
Chairman NUNES. I want to thank the gentleman from Indiana
and for his active participation in the African continent
issues. We look forward to having a good week next week and
hearing back from you. Thank you, Mr. Young.
With that, I would like to thank all the witnesses for
their testimony and for the responses to our questions. I think
you have given us all much to think about. Our record will be
open until August 30th, and I urge interested parties to submit
statements to inform the Committee's consideration of the
issues discussed today.
This hearing is now adjourned.
[Whereupon, at 3:14 p.m., the Subcommittee was adjourned.]
[Submissions for the record follow:]
Africa Coalition for Trade, Statement
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Africa Cotten & Textiles Industries Federation, Statement
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
American Sugar Alliance, Statement
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Brown Shoe 072914TR, Letter
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Footwear Distributors and Retailers of America, Letter
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
National Pork Producers Council, Statement
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
CBI Sugar Group, Statement
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]