Dictated Trade: The Case Against the Africa Growth and Opportunity Act
Dictated Trade: The Case Against the Africa Growth and Opportunity Act [H.R. 1432, S. 778]
President Bill Clinton and the U.S. Congress should be applauded for seeking to define a new U.S. foreign policy toward Africa that recognizes the demands from the continent for political, social and economic change. ACAS also welcomes the legislation’s intent to strengthen U.S. ties with the continent. The current draft of the Africa Growth and Opportunity Act pending before the Senate, however, is worse than no bill at all.
While this trade and investment legislation has won the enthusiastic support of some African governments, and the more lukewarm support of others (note President Nelson Mandela’s dissent), other African social movements and analysts have long argued that the policies promoted by the bill will result in yet greater hunger, poverty, and foreign control over the continent.
The Act does break new ground: it proposes to shift our relationship with Africa from aid to trade and investment. In fact, this month as the trade legislation is being debated, the Senate is also proposing cuts in foreign aid that will result in a 20% t o 30% reduction in foreign aid to Africa according to the Clinton administration.
The legislation offers a series of rewards for countries pursuing IMF style market-led economic reforms, including expanded duty free access to American markets for certain products, equity and infrastructure funds to support US investment, and the establishment of a mechanism to promote and review trade policy toward Africa.
Promoters of the Act, however, have been unable to demonstrate how African producers will benefit, beyond slight increases in textile exports. How producers of other manufactured goods, much less raw materials-and particularly oil which is 70% of US imports from Africa–might gain is not at all evident. It is no surprise that the most industrial and powerful African government has found the bill’s provisions, in the words of Nelson Mandela, “unacceptable.”
Those who will benefit are obvious. As one South African business magazine reported: “the prime beneficiaries of the Clinton African plan are the major American corporations.” Hundreds of millions of dollars in guarantees are allocated to insure US investment, subsidizing firms who reap the rewards of the forced privatization of African telecommunications and infrastructure. While the bill’s promoters speak of assisting Africans, African-Americans, and women, the primary group targeted for assistance a re the multinationals who control Africa’s trade and access to rich markets.
The bill’s sponsors argue there are no conditionalities contained within this legislation. A review of the text of the bill passed by the House, and the legislation pending before the Senate, reveals however an attempt to force African government to prioritize the following policies:
* severe cuts in government spending;
* fire-sales of government assets;
* new rights for foreign investors to buy African natural resources and state firms without limitation;
* deep tariff cuts;
* imposition of US monopoly and patent rules;
* binding membership in and adherence to all World Trade Organization regulations;
* compliance with all International Monetary Fund and other international financial institutions’ rules;
* avoidance of any “activities that undermine US national security or foreign policy interests” [HR 1432].
The US President alone is to apply these eligibility rules, using “quantitative factors” to monitor compliance.
These policies not new: in one form or another international financial institutions and multinational corporations have been seeking to impose them upon poorer African, Asian, and Latin American states for over twenty years. Where they have been implemented in other countries, the outcome is not only a loss of African states’ sovereignty, but documented increases in income inequality, poverty, malnutrition, and increasingly unstable economies.
These outcomes have led directly to widespread opposition to IMF, World Bank, and related programs by African trade unions, democratic movements, church groups, women’s organizations, etc.-and often riots as food prices rise, and health clinics and school s close.
Never however have these policies and conditions been gathered together as in the Africa Growth and Opportunity Act, and then applied to a whole continent. This portends a bleak future, as Africans are stripped of their democratic right to make the most b asic of economic policy decisions, while foreign states and firms dictate trade and investment rules.
If we want to open the door to a more prosperous and democratic future for citizens of both the US and Africa, we need to forge a new relationship based on mutual needs and open public discussions with democratic African governments and movements–and not unilateral and private interests as in HR 1432 and S. 778. In its current form, the Africa Growth and Opportunity Act should be roundly rejected.
July 20, 1998
Contact:
William Martin, Co-Chair
Tel: 217 333 8052; fax: 217 333-5225/359-0949
