Africa: U.S. Congressional Inaction Threatens Jobs, Consumers

31 May 2012
guest column

The United States may jeopardize its relationship with 40 countries in sub-Saharan Africa if Congress does not act urgently to extend a provision of a trade law which allows African-manufactured apparel to be more easily exported to U.S. markets.

There are six days remaining for legislative business in the Congress prior to the 2012 African Growth and Opportunity Act (AGOA) Forum that will take place on June 14 and 15 in Washington, DC. Failure to extend the provision, arising either from inertia or deliberate inaction by some members of Congress, will embarrass the United States when trade ministers from African nations are convened to discuss the future of AGOA and their countries' trade relationships with the U.S.

How can the United States bring together leaders from throughout Africa to discuss the first-ever trade relationship that it initiated and is touted as being vital to U.S.-African relations, while, at the same time, failing to pass a key provision that puts in jeopardy nearly 300,000 jobs on the continent and business for American retailers as well? It is comparable to inviting guests to a dinner and failing to serve the main course.

This failure to act comes at a time when other countries, such as China, India, Brazil and the European Union, are aggressively seeking to advance their interests on the continent by negotiating trade relationships and making investments in sectors ranging from energy to transportation to agriculture to construction and manufacturing.

Why is the United States not more proactive in promoting its business interests on the continent and safeguarding the trade relationships we already have in place?

There has been bipartisan consensus on AGOA since President Bill Clinton signed this measure into law in 2000. Under AGOA, nearly 6,400 products are eligible to enter the U.S. duty-free from those African countries making progress on political and economic reforms. Today, 40 Africa countries are eligible for AGOA's benefits.

Since 2001, the first year the legislation was in place, imports into the U.S. under AGOA have increased 500 percent, from a value of $8.15 billion to $53.8 billion. Oil accounts for more than 90 percent of these imports, underscoring Africa's growing strategic importance to the U.S.

What is most important for Africa, and where AGOA has produced a developmental dividend, is the manufacture of apparel and textile products. For African countries that produce shirts, blouses and pants for the U.S. market, passage of the third country fabric provision is essential to preserving market-share and jobs.

And for the U.S., maintaining the goodwill of these African governments is very important. U.S. companies outside the apparel sector, such as General Electric, Motorola, Wal-Mart, Chevron and Proctor & Gamble, rely on this goodwill to compete in Africa against other global players.

Through quirks in the legislation, the Third Country Fabric provision is set to expire on September 30, 2012, which in legislative terms is the functional equivalent of this afternoon.

If the provision expires, virtually all of the apparel products currently coming into the U.S. from Africa will no longer be cost competitive. Literally hundreds of thousands of jobs, along with related development and diplomatic benefits, will be lost. Already, African manufacturers have lost more than 35 percent of their orders from U.S. customers due to the uncertainty surrounding the extension of the provision, according to the Washington-based African Coalition on Trade which represents exporters in nine AGOA countries. AGOA would be reduced to an oil bill, which certainly is not the intention of Congress or the Obama administration.

The leadership in Congress has to act now in a bipartisan manner not only to preserve jobs in Africa, but also to protect American retailers and consumers. The immediate extension of AGOA's Third Country Fabric provision is as much in the interests of the U.S. as it is the AGOA-eligible countries in Africa. Those members of Congress, whether in the House or the Senate, who would thwart progress for partisan gains, are doing a disservice not only to 40 African countries, but are also compromising the partnerships, trust and goodwill created in the twelve years since AGOA's passage.

A few days remain to do the right thing.

Witney Schneidman is president of Schneidman and Associates, a non-resident fellow at the Brookings Institution in Washington, D.C. and a former deputy assistant Secretary of State for African Affairs in the U.S. State Department. Bernadette Paolo is president and chief executive officer of the Africa Society of the National Summit on Africa and a former staff director of the Sub-Committee on Africa of the U.S. House of Representatives.

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