March 08, 1998
Mark Weisbrot
Sunday Journal, March 8, 1998
By next Wednesday the US House of Representatives is expected to vote on a bill that will try to expand trade with Africa in a way that hurts both Americans and Africans. Mislabeled the “African Growth and Opportunity Act,” the bill has yet to provoke the public debate that it deserves.
In the fantasy world of economics textbooks and theory, trade makes all participating countries better off. Of course there are some winners and losers within countries, but this is seen as incidental– and certainly no reason to oppose any expansion of trade or commercial relations between nations.
But no one should be surprised that in the real world, trade can enrich the few (in a number of countries) at the expense of the many. This is especially true if the rules for expanding trade are written, carefully and deliberately, for expressly that purpose.
Such was the case with NAFTA, which included five chapters protecting and expanding the rights and privileges of international investors. Concerns about labor and the environment were relegated to a mostly unenforceable side agreement.
The Africa trade bill continues in the NAFTA tradition. It would provide new, unlimited access to the U.S. market– most immediately for textiles and apparel. It is not even clear that the goods entering the country would actually be produced in Africa, since the bill does not provide for appropriate enforcement to exclude goods transhipped through the region from elsewhere– for example, China. Many of the 1.3 million Americans currently employed in the textile and apparel industry (four-fifths of whom are women and two-fifths of whom are African-American or Latino) could be hard hit by this new influx of low-wage imports.
At the same time it requires the countries of sub-Saharan Africa to open their markets to imports and foreign investment. There is no consideration of whether such policies will wipe out small farmers who cannot compete with subsidized foreign grain, or what will happen to local businesses. In fact, the bill requires that governments make no more demands of large transnational corporations– many of whom have revenues greater than the entire economy of an individual country in the region– than they do of small local enterprises.
These transnational corporations especially have their eye on the extraction of minerals, and ownership of privatized infrastructure, including even roads. This bill will help them get their hands on what they want, under the conditions that they want.
It is difficult to imagine that they could get away with this kind of a colonial assault on any other continent, with so few political repercussions. That’s because Africa is really out of the news here, with the few reports that do surface riddled by stereotypes of people entrapped in a seemingly endless cycle of hunger, warfare, “tribalism,” and natural disasters.
Africa is indeed poor. Fifty per cent of Africans live in poverty, with 40% living on less than a dollar a day. Forty percent also suffer from malnutrition and hunger.
But the sources of African poverty are not inherent in the land or people. They have more to do with lack of access by ordinary people to the resources they would need to make a decent living. For most of the population, which is agricultural, this means land, tools, seed, credit and other agricultural inputs. There is also a need for investment in infrastructure, such as roads, as well as education and health care.
If our government really wanted to help Africa, they would be offering substantial and immediate debt relief. The foreign debt of Sub-Saharan Africa (excluding South Africa and Namibia), is about $200 billion dollars. This is greater than these countries’ combined national income, by more than 20%.
The continued drain of debt payments, which claim 80% of these countries’ foreign exchange earnings, makes it impossible for them to sustain the investments they would need to escape from poverty. The Africa trade bill only worsens their situation. The bill strengthens the hand of transnational corporations, while simultaneously restricting the ability of host countries to tax them. It also gives Washington an even stronger veto power over these countries’ major economic decisions, thereby precluding any strategy for national or regional economic development.
Yet many members of Congress are prepared to vote for this legislation, thinking that they are contributing to the economic development of the poorest region in the world. Let’s hope that enough of them wake up before this bill becomes law.
