While dozens of African ambassadors and other government leaders have publicly endorsed this Bill, many African critics, including South African President Nelson Mandela and numerous civil society groups, have greeted the bill with suspicion and concern. They are joined by numerous U.S.-based non-governmental organizations with experience of conditions on the continent.

These critics believe that this legislation fails to adequately address Africa's debt problems, poverty and overall economic and environmental crisis. Since this Bill is now largely the framework for a new Africa policy these exclusions are particularly worrisome.

Numerous analysts point to a serious flaw in the current trend towards replacing aid with trade and stress that opening markets by themselves will not produce sustainable and equitable economic development. These critics are backed by Organization of Economic Cooperation and Development (OECD) economists who note that there is no simple relationship between trade liberalization and poverty.

In fact, lower trade barriers for African goods entering the United States will produce no benefit for most African states. Most of these states are simply not in a position to export significant amounts of goods to the United States. Further, the playing field between these states and the United States is grossly unfair.

To quote one analyst, R.W. Apple Jr. in the New York Times, March 30, 1998: "The United States is so powerful that it can all but crush the comparatively tiny nations and economies of this continent in its embrace."

The Africa Fund is currently making a critical assessment of the Bill which takes a wide range of perspectives into account. Below is a summary of some of the pros and cons we have identified to date.

Some Positive Aspects of the Bill

Recognizes the need for poverty reduction.

The preamble of the Bill acknowledges the need to "promote stable and sustainable growth and development in Sub-Saharan Africa" and "to reduce poverty and increase employment among the poor."

Further, it recognizes the importance of the provision of basic health and education for poor citizens, increased market and credit facilities for small farmers and producers and improved economic opportunities for women as entrepreneurs and employees.

Supports regional integration

The Bill supports regional economic integration efforts in Africa, an important step in creating larger and more viable regional markets on the continent.

Encourages more American-African trade and investment linkages

The Bill attempts to encourage more American-African trade and investment linkages. It would create equity funds for use by American businesses willing to invest in Africa and would formalize meetings between African and American government officials through the creation of the United States-Sub-Saharan Africa Trade and Economic Cooperation Forum.

This diversification of trade and investment linkages for both the United States and Africa is a potentially useful step for enhancing economic growth in both regions.

Some Serious Problems with the Bill

Only helps a small number of countries. The Bill would only help a relatively small number of countries that are at the level of economic development to take advantage of the major incentives in the legislation.

Trade concessions are, thus, in actuality quite minor because most African countries are not at a point where they can take serious advantage of the Generalized System of Preferences (GSP) Program tariffs.

By singling out a few countries for special treatment, this initiative could potentially threaten regional trade initiatives.

Backs Structural Adjustment Programs that deepen poverty

The Bill imposes stringent criteria for participation. Some of these criteria contradict the aim of alleviating poverty.

For example, the Bill requires adherence to International Monetary Fund (IMF) Structural Adjustment Programs (SAPs), even though these programs have been responsible for major cutbacks in provision of health and education to the poorest citizens.

Even James Wolfensohn, current President of the World Bank, recently admitted this in his November 5, 1997 discussion with Cardinal Roger Mahoney, Archbishop of Los Angeles.

In fact, SAPs have transferred the cost of adjusting the economy to the poorest, particularly women and children, and need to be rethought. This has been well documented by numerous scholars as well as UNICEF, who is promoting "adjustment with a human face."

Makes no firm commitment on debt reduction

The Bill acknowledges that crippling debt is a serious hindrance to economic growth on the continent and recommends in non-binding language support for the Heavily Indebted Poor Countries Initiative (HIPC)of the IMF/World Bank as it currently stands with its extremely harsh conditions.

Even the few heavily indebted countries considered for debt relief will have to continue to commit to structural adjustment for three years before they will be considered for assistance in the HIPC Initiative. The cost of this wait in terms of lives lost to preventable diseases and children's missed education is immense.

For example, the debt service payments for Uganda in 1996 amounted to $184 million - more than one third of Government revenue. This sum represents twelve times as much per person spent on primary health, and nine times as much spent on primary and secondary education.

In February 21, 1998 Economist, Gordon Brown, Britain's Chancellor of the Exchequer, made a striking plea for more flexibility in implementing the HIPC Initiative. He cites Mozambique as a test case of the international community's commitment to debt relief. While it is a country that has struggled to reform, it spends twice as much on servicing its debt than on basic services. Even then, the burden of debt is so great that Mozambique manages to service only one third of its obligations!

There is a growing understanding, then, that effective Africa policy will require complementary initiatives to reduce Africa's debt, which currently exceeds $314 billion. Yet the Bill hardly deals with this situation. This is true even though efforts to promote private investment cannot be successful within the context of this persisting debt crisis.

The United States at present continues to use its influence to delay implementation of debt reduction under the HIPC Initiative. This initiative, while a move in the right direction, still fails to address the debt problem of the majority of African countries.

Fundamentally, the development of a self-reliant African economy involves mobilizing knowledge, skills and energy. Such development cannot occur until the G-7 countries and international financial institutions dramatically reduce Africa's debt and free up resources for health, education and the productive capacity of local people.

The vague language in the Bill does not yet suggest the U.S. is serious in its commitment to debt reduction.

Ignores unequal playing ground, especially in agriculture.

While free trade may be a good way of promoting growth, achieving greater equity requires a relatively level playing ground. As the Bill admits, the playing ground between the United States and Africa is grossly unequal.

Nowhere is this problem more important than in the realm of agriculture. The average American farmer gets $14,000 worth of subsidies a year. Contrast this to the average African farmer, who is most likely to be a woman and who receives no subsidy, or worse, actually suffers from government interference in local markets. While internal agricultural liberalization would be a good thing, the reduction of tariffs on American agricultural products would likely result in dumping. Dumping would cause the fall of local prices, hurting the majority of small-scale African farmers.

The net result would be lower food production locally and increased dependency of foreign imports. This means less food security and more dependency for the continent, not the "economic self-reliance" the Bill claims as a goal.

While in principle, African governments have recourse to the World Trade Organization (WTO) to protect their farmers and businesses from unfair trade practices, many African analysts note the practical incapacity and often lack of will of many governments to do this.

One striking case is the failure of the Kenyan government to take the United States to the WTO over the imposition of textiles quotas in 1996 - even though there were serious economic losses to the country.

Provides no mechanism for ensuring adequate labor and environmental standards are maintained. Adherence to acceptable environmental and labor standards are not part of the eligibility requirements for African countries to participate in this initiative.

Thus, this Bill misses an opportunity to apply pressure to improve these standards in Africa, where repression of labor and disregard for basic environmental standards are not uncommon. Currently, the decision to include any specific country from the initiative is based solely on the discretion of the President.

In addition, the Bill relies on the WTO as the dispute resolution mechanism for trade conflicts including concerns relating to environmental or labor standards of foreign companies. To date, WTO's rulings in disputes brought before it are based on narrow trade concerns excluding environmental and labor considerations.

Thus, the WTO is a wholly unacceptable forum for mediating trade disputes that necessarily bring in wider and important considerations.

In brief, there are mixed views concerning what is to be done about the African Growth and Opportunity Act as it moves into the Senate.

At one end are the views of some of the original sponsors of the Bill, such as Representative Charles Rangel, that the African Growth and Opportunity Act draws attention to Africa and that this initiative could potentially encourage more badly needed foreign direct investment on the continent. At the other end are the views of those such as Randall Robinson of TransAfrica, who said "a bad bill on Africa is worse than no bill at all" and that therefore, amendments are necessary.

Sponsors of the Bill (House): Congressmen Phil Crane, Jim McDermott and Charles Rangel. Sponsors of the Bill (Senate): Senators Spencer Abraham, Thad Cochran, Patrick J. Leahy, Joseph Lieberman and Richard G. Lugar.

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