US/Africa Trade: Reform Needed, 08/15/'95

The U.S. administration is obligated by the new GATT treaty and by 1994 legislation mandating "a comprehensive trade and development policy for the countries of Africa" to find ways to adjust the existing "General System of Preferences" to create more opportunities for African countries. Although the administration has been slow to act, the office of the U.S. Trade Representative (USTR) is currently drafting a policy initiative, to be ready in September.

One of the groups taking the lead in urging a more responsive policy is the Environmental and Energy Study Institute. The documents below include a letter from EESI and other groups to the USTR, and a short position paper prepared by EESI. For more detailed information, please contact:

Environmental and Energy Study Institute (EESI)
122 C St. NW, Suite 700
Washington, DC 20001
Tel: (202) 628-1400 Fax: (202) 628-1825
Email: eesi@igc.apc.org

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Letter to the U.S. Trade Representative

July 13, 1995

The Honorable Michael Kantor
United States Trade Representative
600 Seventeenth Street, N.W.
Washington, DC 20506

Dear Mr. Ambassador:

The United States must help African countries dramatically expand and diversify their exports if such countries are to achieve long-term, sustainable development. However, U.S. trade policy now makes it difficult for many African countries to export manufactures and many processed commodities. In response to this situation, last December Congress passed legislation (H.R. 5110) requiring the President to implement a "comprehensive trade and development policy for Africa." Initial indications are that this policy is not being implemented as vigorously as necessary. (Please see attachment [available from EESI]).

As representatives of a diverse group of U.S.-based non- governmental organizations and private voluntary organizations with humanitarian and economic interests in Africa, we are writing: 1) to urge you to ensure that the Administration fulfills its Congressionally enacted mandate to improve U.S. trade policy toward Africa through reform of the Generalized System of Preferences program (GSP) and other means, and 2) to offer the following recommendations for meeting this imperative.

a. Regarding establishment of the inter-agency working group and private sector advisory committee

The perception that the inter-agency working group is not fulfilling its mandate as vigorously as possible is based partly on the fact that the group has made no attempt to consult with nongovernmental organizations (NGOs) since its inception five months ago. If the working group is to fulfill its Congressionally given mandate to reform U.S. trade policy toward Africa over the next five years, it must consult with NGOs. With their unique expertise and access to information, NGOs can contribute substantially to efforts of the working group. Moreover, USTR is bound by legal and other commitments to ensure NGO participation in working group efforts.

Thus, we ask you to continue your impressive efforts to promote openness in trade policy by ensuring that all proceedings of the working group and its private sector advisory committee are transparent and open to meaningful public input.

Specifically, with respect to the inter-agency committee, we suggest that all documents which are subject to the Freedom of Information Act (FOIA) be made available to the public, immediately upon their release, through the USTR reading room and other appropriate channels. We also suggest that most documents relating to inter-agency deliberations (i.e., documents which are not necessarily subject to FOIA) be made available to the public unless a compelling need exists for them not to be. In cases where some confidentiality is warranted, we urge that documents be derestricted and made available to the public as soon as possible.

Further, we urge the chairman of the inter-agency committee to follow the example of USTR's Office of Environment and Natural Resources by offering regular public briefings. The purpose of these briefings should be to inform the public of proceedings in the working group and to request input, including written comments, for distribution to all members of the working group.

With respect to the private sector advisory committee, we first note application of the Federal Advisory Committee Act (FACA) to this committee. As you know, FACA guarantees open meetings, timely public access to documents, and the opportunity to submit comments to most advisory committees of the federal government.

Further, we request information about the process USTR is undertaking to nominate and appoint members to the advisory committee. This process should be transparent, it should proceed quickly, and it should ensure that the committee fully represents the full diversity of non-governmental organizations, private voluntary organizations, academics, and business representatives which have an interest in reforming U.S. trade policy toward Africa. Regarding the last point, we would be happy to submit names of individuals and organizations that would be qualified to serve on the committee.

By establishing transparent processes for and public involvement in the inter-agency working group and private sector advisory committee, USTR will obtain much more useful input on and support for its efforts to reform Africa trade policy.

b. Regarding reauthorization of GSP

In his Statement of Administrative Action accompanying H.R. 5110, President Clinton indicated that he would establish a new trade and development policy for Africa through, among other things, enhancements in the GSP program. However, according to GSP Office Director Dan Shepherdson, USTR officials responsible for developing the new Africa trade policy provided no input to those parties responsible for developing this year's GSP renewal legislation, which would extend the program five years, and the legislation includes no improvements for African countries. This situation is troubling, for not only does this year's GSP renewal represent an important opportunity to reform U.S. trade policy toward Africa -- an opportunity which should be taken advantage of -- but also USTR's failure thus far to take advantage of the opportunity suggests a serious lack of commitment to fulfill Congress' mandate.

Thus, we strongly urge the administration to develop amendments to the current GSP program which will expand benefits for African countries as part of this year's reauthorization of the program.

Specifically, we recommend that all statutory product exemptions be waived for exports coming from "low human development" countries as designated annually by the United Nations. Most low human development countries are in Africa, and most Sub-Saharan African countries are considered to have low human development. The category includes "least-developed countries," plus other countries which, besides being impoverished, suffer from short life expectancies and illiteracy. According to the U.N. Development Programme, "low human development" is a more appropriate classification than "least developed" for identifying countries in dire need of economic improvement, since it relies on appropriate measures besides per capita GDP to identify lack of development. Implementing this recommendation would satisfy GATT's call for the United States' to expand benefits for least-developed countries, as well as Congress' mandate to improve trade with Africa.

We recognize that this proposal is likely to generate cries of opposition from some U.S. industries that avoid competition by hiding behind protectionist trade policies. However, because most low human development countries export an extremely small amount of GSP-exempted products, including textile and apparel products, to the United States, most such countries could increase their exports of such products to the United States by large percentages without harming U.S. producers or workers. For the few cases in which domestic injury or threat of injury might result from the provision of GSP treatment to a particular article from a particular low human development country, a safeguard mechanism could be established for limiting GSP treatment for that article with respect to that country. Such a mechanism clearly would be more efficient, and produce more benefits to the United States and Africa, than continuing to exempt major categories of goods from GSP treatment across the board, and offering U.S. consumers access to a wider variety of products at lower prices, as this proposal would do, would clearly benefit the United States. _________________________

Again we strongly support the mandate which Congress has given the President to improve U.S. trade policy toward Africa through reform of the Generalized System of Preferences and other means. This mandate represents an important opportunity to promote the United States' interest in improving economic conditions in Africa while benefitting U.S. consumers and not spending taxpayer dollars at a time when many policymakers are advocating "trade not aid" policies.

We look forward to your response to this letter and to working together to reform our trade policy toward Africa.

Sincerely,

Ken Murphy
Executive Director
Environmental and Energy Study Institute

On behalf of:

David Beckmann
President
Bread for the World

Maura Browne
Executive Director
Africa Faith and Justice Network

Imani Countess
Executive Director
Washington Office on Africa

Melvin Foote
Executive Director
Constituency for Africa

Vivian Lowery-Derryck
President
African American Institute

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EESI

Reforming GSP to Benefit Sub-Saharan Africa: A Position Paper

The Generalized System of Preferences (GSP) was created to help developing countries diversity their economies away from commodity exports by giving them more opportunity to export manufactured goods. However, the least developed countries have derived virtually no benefits from the program: only one- tenth of one percent of the imports given duty-free treatment under the GSP have been from the least developed countries. One major reason is that the existing law excluded those manufactured products which very poor countries, just beginning to industrialize, are most likely to be able to export, such as textiles and apparel products and leather products. This exclusion ignores the fact that most of the poorest countries in the world could increase their exports of currently exempted products by very large percentages without harming U.S. producers.

The administration's new Africa trade policy initiative must include recommendations for changes in the existing GSP legislation that would provide additional benefits to the poorest countries, the vast majority of which are in Sub- Saharan Africa.

Specifically, we urge that the following changes be included in the administration's plan:

1. Waive the statutory product exemptions for countries that are defined by the United Nations as "low human development countries," provided that if the President determines that domestic injury or threat of injury would result from the provision of GSP treatment to a particular article from a particular "low human development country" he may withdraw GSP treatment for that article with respect to that country.

There are 62 "low human development countries" as defined by the United Nations Development Program's Human Development Index, of which 41 are Sub-Saharan African countries. Only South Africa, Botswana and Mauritius, among the Sub-Saharan African countries, are classified as "medium human development countries." Among the low human development countries, only India, Pakistan, Bangladesh and Egypt are likely to export import-sensitive goods that would have any substantial impact on the U.S. market. Those countries would be denied special benefits if the President determines that there would be injury to a domestic industry.

2. Make it easier for Sub-Saharan African countries to take advantage of duty-free treatment for their exports by waiving for low human development countries the complicated requirements for designating an article for GSP treatment. At present, in order to be accepted for consideration by USTR, petitions must contain a great deal of detailed information, which many of the least developed countries do not have the resources at present to provide. As a result, there is reason to believe that most Sub- Saharan African countries have not taken advantage of benefits that are currently available to them under the GSP. Low human development countries should be allowed automatic GSP treatment for their goods unless and until the import of the good from that country is found to cause domestic injury.

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Message-Id: 199508152151.OAA21769@igc3.igc.apc.org
From: "APIC" apic@igc.apc.org
Date: Tue, 15 Aug 1995 17:49:44 +0000
Subject: US/Africa Trade: Reform Needed

Editor: aadinar@sas.upenn.edu