"Making the U.S./Africa Partnership a Reality"

Report on the first quarterly meeting held on October 14, 2011 with the African Diplomatic Corps.

The First Quarterly meeting with the African Diplomatic Corps served as a springboard to launch the Working Group on Trade and Investment in Africa (WGTIA). The Africa Partnership for Economic Growth Caucus (APEGC) co-Chaired by The Honorable Bobby L. Rush, the Ranking Member of the Energy and Power House Subcommittee of the Energy and Commerce Committee and The Honorable Donald M. Payne, the Ranking Member of House Subcommittee on Africa, Global Health, and Human Rights, were hosts.

The Wilson Center’s Africa Program convened and organized the proceedings. Steve McDonald, Director of the Wilson Center’s Africa Program and Project on Leadership and Building State Capacity, chaired the meeting. Former Ambassador Rosa Whitaker, of the Whitaker Group and former Assistant U.S. Trade Representative for Africa and co-Chair of the AGOA Action Coalition, served as moderator. Scene-setting remarks were delivered by APEGC’s co-Chairs, followed by an official statement by H.E. Sheila Siwela, Ambassador of Zambia to the United States, who chairs the AGOA Trade Committee. Karen Tandy, Senior Vice President of Public Affairs, Motorola Solutions, gave a special private sector presentation.

The consultation was then opened up to all participants, including the following Members of Congress: The Honorable Charles Rangel (D-NY), The Honorable Melvin Watt (D-NC), The Honorable Hansen Clark (D-MI), The Honorable Eddie Bernice Johnson (D-TX), The Honorable Russ Carnahan (D-MO), The Honorable Sheila Jackson Lee (D-TX); David Ramseur, Senator Mark Begich’s Chief of Staff (D-AK), Gregory Simpkins, Majority Staff Director, Subcommittee on Africa, senior staff from Congressman Ed Royce (R-CA) and Congresswoman Barbara Lee’s (D-CA) offices and lead staff from the Congressional Muslim Staff Association (CMSA) and the Congressional African Staff Association (CASA). Ambassadors in attendance were; H.E. Angele Niyuhire of Burundi, H.E. Charles Joseph Bienvenue Foe of Cameroon, H.E. Veiga Fatima Lima of Cape Verde, H.E. Girma Birru Geda of Ethiopia, H.E. Daouda Diabate of Cote d’Ivoire, H.E. William V.S. Bull, Sr. of Liberia, H.E. Traore Mamadou of Mali, H.E. Soborun Somduth of Mauritius, H.E. Ebrahim Rasool of South Africa, H.E. Bariki Limbiye of Togo, and H.E. Kamunanwire Pereki of Uganda; officials from Embassies of Nigeria, Madagascar, and Wanda F. Felton, First VP Export Import Bank, Raja Jandhyala, USAID, Africa Bureau and companies such as Procter and Gamble, Archer Daniels Midland, General Electric, Cummins Engine, Schneidman International, Gamut International, and the U.S. Chamber of Commerce and the National Black Chamber of Commerce.

Key Points

The subsequent discussion revolved around a number of issues of import. Of significance were:

1. Commitment to strengthen and extend the Africa Growth and Opportunity Act (AGOA) and 3rd Country Fabric remains a priority for this Congress;

2. Agreement that today’s meeting would serve as an ongoing forum for the promotion of ideas and the cultivation of relationships between Members of Congress, African Diplomatic Corps, and the private sector;

3. Promote Cote d’Ivoire’s eligibility to resume participation in AGOA and move that initiative forward post-haste;

4. Advance efforts to improve U.S. competitiveness with regard to China – through strengthening Export Import Bank (EIB) and other public initiatives to make it easier for U.S. companies – both large and small and medium enterprises (SMEs) – to obtain investment financing in Africa, specifically addressing outdated domestic content requirement rules to make U.S. regulations consistent with other industrialized countries;

5. Support “The Increasing American Jobs Through Greater Exports to Africa to Spur African Economic Growth” that Congressman Rush and Senator Dick Durbin are working on to increase exports to Africa via EIB financing and more favorable investment conditions for U.S. companies in Africa;

6. Provide Members of Congress who are champions of AGOA with the information and support necessary to make compelling cases of linkage to U.S. national interests that build a constituency for AGOA renewal and extension;

7. Private Sector representatives were unanimous in their call for a leveling of the playing field as far as American businesses are concerned, and equipping those businesses with the tools to access and to compete in African markets;

8. Tap the potential of the African Diaspora for partnership in promoting U.S. trade and investment within Africa.

The APEGC was created during the 111th Congress by Congressmen Rush and Payne to foster stronger commercial and economic ties between the U.S. private sector and Africa. The primary mission of APEGC is to promote bilateral private sector development that will increase export, investment and economic growth for large and small U.S. and African firms. It is dedicated to educating Members of Congress on issues affecting the commercial and economic relations between the U.S. and African countries. During a consultation between APEGC and African Embassies on July 22, 2011, a consensus was reached on the pertinence of an African Working Group on Trade and Investment to allow greater communication between Members of Congress, the Diplomatic Corps, civil society actors, and the private sector on issues related to U.S./African economic relations.

This inaugural meeting, co-Chaired by Congressmen Rush and Payne, had as its objective the exploration of how the APEGC’s goals could be met and to launch the WGTIA as a continuing forum for the sharing of information and the exchange of ideas on matters of cooperation, development, and growth. This was the first in a series of quarterly consultations with the Africa Diplomatic Corps.

Opening Remarks by Co-Chair Donald M. Payne

In his opening remarks, Congressman Payne stated that when he held his annual Brain Trust on Africa during the 2011 Congressional Black Caucus Foundation’s Annual Legislative Conference, “The key takeaway from the forum was that Africa is indeed an emerging global economic power and Africans are looking for trade and investment, not just aid. Each panelist spoke with optimism about the current economic opportunities and the lasting effect that foreign direct investments can have on a country. They spoke of the need to strengthen Africa’s SMEs and hire locally when doing business in Africa. They mentioned the importance of revamping insufficient and slow moving U.S. and global financial instruments to give American businesses better access to the African market and African businesses better access to the global market.” Congressman Payne added that “fostering robust trade between African countries is an essential step for the continent. Beyond trade, we must look to foster foreign direct investment in Africa. In the last few years, many African countries have seen a surge in foreign direct investment, with a great deal of that money coming from India and China. Comparatively, the U.S. has been slow to react to the change in Africa.” Many private sector companies in the U.S. remain hesitant to invest in the continent because of political instability and violence in the region. He concluded that “The United States must continue to be a partner in Africa’s progress and build a relationship based on mutual respect and interests. Africa is ready to transition from an afterthought to a major figure in the world economy and the U.S. should make the necessary policy changes to ensure that our financial instruments are revamped to fully support this transition.”

Opening Remarks by Co-Chair Bobby L. Rush

In the Congressman’s opening remarks, it was asserted that he strongly believes that “Africa holds the keys to its own development. The evidence shows that the continent is experiencing economic take-off. At the same time, we are facing serious competition in our economic relations with African countries. I have not met a single public official or private sector representative from either the African or North American continent who has said they do not want more trading activity between them. What is clear to me is that stronger partnerships will forge the link that is currently missing.” Congressman Rush remarked that the APEGC would not be complete without a “Members-Ambassadors Forum” and the inclusion of the private sector. This was therefore the impetus behind the meeting. The Congressman stated “it is important that the U.S./Africa Partnership becomes a reality” and reasoned that, “what constitutes a solid, historical bridge between the U.S. and the continent of Africa, is the African Diaspora.” He characterized the African Diaspora as a “force” and urged deeper engagement with it.

Opening Remarks by H.E. Sheila Siwela

Ambassador Siwela of Zambia who is also co-Chair of AGOA stated that “the meeting signaled the beginning of a true partnership between Africa and the U.S.” She paid tribute to the U.S. for the favorable responses and commitment from Secretary of State Hillary Rodham Clinton and the U.S. Trade Representative Ambassador Ron Kirk during the AGOA Forum where they pledged to support the extension of AGOA preferences and the third-country fabric provision beyond their current life spans. Ambassador Siwela emphasized the urgent need for the extension to sustain investor confidence which she said “is prone to falter as the expiration date nears.” More importantly, she concluded by noting “the need to ensure that thousands of jobs that directly or indirectly depend on these provisions were not lost.”

Discussion Overview

AGOA produced impressive results in 2010. However, as AGOA comes up for renewal in 2012, the discussion has shifted towards an analysis of how a languishing American business community can better leverage the engines of trade and investment in Africa to create jobs at home and benefit American economic interests. For those who support AGOA extension, such as the group gathered at this meeting, it is important to strategize on that message and to understand that, in the current economic climate, “selling” this message to Congressional colleagues is difficult. A need exists for AGOA countries to speak in a uniform voice to urge the U.S. to expand the legislation, to prioritize infrastructure, and to focus on regional integration. Congressman Rush asked how African countries can be assisted in expediting this regional integration, expressing the importance of building vertical and horizontal integration into Africa’s economic growth, and also insisted on the necessity of including processed and value-added products to create more jobs within the U.S. and Africa.

Ambassador Rasool of South Africa pointed out the responsibility on the part of the diplomatic corps to equip proponents of AGOA in Congress with the proper information to avoid misunderstandings. Congress has a predisposition toward default protectionism that is unconstructive. AGOA is a “win-win” for everyone involved and it is important to expound on those gains to consider how investment and trade can be enhanced and entwined.

The meltdown of the global financial system of a few years ago means that there is space for emerging markets – particularly those found in Africa – to play a larger role. Africa is where the next wave of economic growth and development is going to occur. This economic expansion will take place on a massive scale because African economies were not exposed to the same extent as many of Western nations during the crisis and have yet to integrate fully into the global economy.

America and Africa can partner more effectively to work in industries, such as textiles, to realize this potential. Yet, legislative work remains, so that market opportunity encompasses agricultural products destined for the U.S. Although legislation has been enacted to incentivize African leaders who are democratic and transparent, it is uncontestable that women and young people are the driving force behind these growing economies. Unfortunately, these key demographics are not always supported by their governments. The U.S., for its parts, confounds the problem by its tendency toward bilateral engagement, instead of directly working with the people. There have been congressional initiatives to engender a deepening of economic relations between the U.S. private sector and Africa, and to promote bilateral and central development for large and small U.S. and African businesses. Stronger partnerships will fill the void between the disparate worlds. More engagement with Africa is unmistakably necessary. In that respect, the African diaspora constitutes a powerful, yet underutilized bridge between the U.S. and Africa. A true alignment around core interests is required to make progress. It is time for the U.S. to become more pragmatic and to step outside the bounds of conventionalism when it conceptualizes the African continent.

Many participants praised AGOA for providing the platform for high-level consultations and increased trade competitiveness. The benefits of AGOA, they said, cannot be overemphasized with respect to its effect on the textile industry in Africa and the improved living standards of thousands of Africans. Ambassador Somduth of Mauritius charged that AGOA should be used for “the development of value chains which will culminate in regional integration.” It was made clear that the priority going forward would the bill’s extension, as well as the extension of the third-country fabric provision. Some members of the diplomatic corps were unsettled by the prospect of AGOA lapsing and lauded the legislation for its positive contributions to democracy, transparency, and women’s rights.

Ambassador Diabate of Cote d’Ivoire highlighted his country’s desire to rejoin the ranks of AGOA. In response, Congressman Charles Rangel said that Cote d’Ivoire’s return to AGOA eligibility was an initiative that had the support of various Members of Congress. Moreover, Congressman Rush posited that companies already exporting under AGOA should not lose their trade preferences and workers should not be summarily thrown out of work after having earned a living for themselves and their families.

David Ramseur of Senator Begich’s office noted that “we may not think that Alaska and Africa have a lot in common but we are concerned about unregulated fishing, which is a problem we share with East African countries. We also have similar mineral rights issues and are eager to share our experience and expertise regarding to Alaska’s successful Permanent Fund.” He congratulated South Africa’s leadership on this year’s Whaling Commission and remarked how responsive the country has been to indigenous concerns.

Scott Eisner of the Chamber of Commerce raised two issues of consequence to consider from the purview of the U.S. and Africa. Firstly, the conflict mineral resolution: coordination is essential with the Security and Exchange Commission (SEC) so that standards are concise and attainable. Secondly, the matter of local hiring, is complex in that while appropriate and to be encouraged is sometimes unrealistic. Though many businesses would like to boost local engagement, the education level of potential hires is not always commensurate with the rigors of the job. There is a need to think creatively and collaboratively when it comes to meeting these challenges over the long haul. Africans should start demanding that the second and third phases of production occur in their countries, as opposed to factories abroad.

Public and Private Sector Cooperation – Leveling the Playing Field

Karen Tandy from Motorola Solutions (MS) asserted that the organization had been active in African countries for 40 years and taken a slew of development initiatives to the continent. However, the company has been severely thwarted in its efforts to extend its business footprint in Africa, owing mainly to the favorable financing and uneven playing field, which many Chinese companies seize advantage in Africa. MS is simply uncompetitive. EIB is essential in terms of financing, but there are many rules that are today antiquated and irrelevant. MS loses out on hundreds of millions of dollars in Africa because the Chinese, in an uncontested market, can offer an inferior technology that they themselves do not use. Congress needs to take a closer look at financial regulations and amend the rules of engagement. Congress has the ability to make an enormous difference. In response, Congressman Rush said that a bill (the Increasing American Jobs Through Greater Exports to Africa to Spur African Economic Growth) is in the works to help American companies obtain more export financing, which would allow EIB to lower its loan admissions requirements.

Del Renigar from General Electric (GE) maintained that the firm considers African countries to be partners. GE has opened an office in Nairobi, Kenya and is extending its operations southward to neighboring African countries such as South Africa and Angola. The firm is taking deliberate steps to position itself as the one-stop shop for countries seeking to increase their GDPs and to improve the quality of life and access to healthcare for their people. Yet, GE cited its needs with respect to increased flexibility in African countries where carbon-cap restrictions are concerned. The current US regulatory framework is, in some regards, burdensome and kneecaps companies like GE.

Wanda Felton from EIB added that even though the Bank has a congressional mandate to do business with African countries, its commitment to the continent is much broader than just a mandate. Businesses are growing at approximately double the rate that was seen in 2010. EIB had 177 transactions in 20 different countries last year. A great deal of private sector activity and entrepreneurship occur off radar. Plainly, economic/export activity in Africa creates job in the U.S. One need only consider the example of an American company manufacturing solar panels, which were then shipped to Namibia for assembly and finally sent back to the States.

Engaging the Diaspora

As Congressman Rush encouraged Black-American businesses to think and act globally and to look toward Africa. There was a broad agreement among Members of Congress and other participants that the African Diaspora is a resource relatively untapped which offers great potential for development and progress on the continent and closer U.S./Africa economic ties. Congresswoman Eddie Bernice Johnson advocated for a strengthening of links between historically black colleges and African institutions. Congresswoman Sheila Jackson Lee invited the African diplomatic corps to visit congressional districts and meet American constituents and businesspeople there. Clearly, educational outreach, as well as a joint task force of small U.S. and African minority businesses would be beneficial.