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AGOA and MCA Modernization ActOn Jan. 17, 2018, the House of Representatives passed H.R. 3445, the AGOA and MCA Modernization Act. The legislation adds on to the original African Growth and Opportunity Act, or AGOA, which was passed into law on May 18, 2000, by the 106th Congress.

As an extension of AGOA, the AGOA and MCA Modernization Act encourages plans to promote trade and cooperation while also providing aid to countries that are AGOA eligible. The region of focus of the legislation is sub-Saharan Africa, with the goal being to build private sector growth. Under the bill, the President will be directed to create a website with information about AGOA along with encouraging embassies in chosen countries to promote export opportunities to the United States.

In addition, the​ ​bill​ ​would​ ​give​ ​the​ ​Millennial Challenge Corporation (MCC)​ ​the​ ​authority​ ​to​ ​develop​ ​a​ ​second​ ​concurrent​ ​compact​ ​with countries,​ ​provided​ ​the​ ​compact​ ​focuses​ ​on​ ​regional​ ​economic​ ​development.​ The​ ​ability​ ​to​ ​enter​ ​into​ ​a​ ​second​ ​compact​ ​will​ ​be​ ​limited​ ​to​ ​countries​ ​that​ ​demonstrate​ ​progress toward​ ​meeting​ ​the​ ​objectives​ ​of​ ​the​ ​first​ ​compact​ ​and​ ​capacity​ ​to​ ​handle​ ​an​ ​additional​ ​compact.

The MCC was created in 2004 by the Bush administration, with the aim to reduce poverty through economic growth. The MCC has committed more than $10 billion in 58 projects in 25 countries. Around 70 percent of this investment has gone into infrastructure projects like highways and ports and an increasing percentage is being invested in energy.

On the House floor prior to the vote, House Foreign Affairs Committee Chairman Rep. Ed Royce (R-CA-39) said that the AGOA and MCA Modernization Act “seeks to facilitate trade and private sector-led growth in poor but relatively well-governed countries, particularly in Africa, so they can grow their own way out of poverty.”

“Through AGOA, goods produced in eligible African countries enter the U.S. on a duty-free basis. To be eligible, countries must be committed to the rule of law, eliminating barriers to U.S. trade and investment, combating corruption and supporting counterterrorism activities. So AGOA advances U.S. interests on many levels.”

Trade being a driver of economic development and increased civilian participation in politics is one of the main arguments for passing the AGOA and MCA Modernization Act. Economists and experts agree that the legislation does not just benefit sub-Saharan Africa, but also the United States, as it helps create jobs and benefits consumers and companies through free-market principles.

Rep. Karen Bass (D-CA-37) was enthusiastic about the passage of the AGOA and MCA Modernization Act by a unanimous vote. Bass is a ranking member of the House Africa Subcommittee. She is an avid supporter of the legislation and said the policy would foster economic development, as well as strengthen the United States as an international leader and boost the domestic job market and economy.

The bill was introduced to the House by Rep. Royce. At the time the bill was initially introduced, Rep. Royce along with fellow representatives Bass, Eliot Engel (D-NY) and Chris Smith (R-NJ), stated that steering developing countries toward trade and away from aid helps African countries and women. Africa’s consumer spending nearing $1 trillion was what prompted the four to push for the passing of the AGOA and MCA Modernization Act.

The AGOA and MCA Modernization Act still needs to be approved by the Senate. The bill has been introduced by Sens. Ben Cardin (D-MD), Johnny Isakson (R-GA) and Chris Coons (D-DE) as S.832. Sen. Coons stated that it is vital that Congress does all it can do to promote economic growth in developing countries and expand American business access to foreign markets. He is excited that the act will encourage trade with sub-Saharan Africa.

The recent passing of the AGOA and MCA Modernization Act in the House may give the legislation the momentum it needs to soon be accepted in the Senate. Visit The Borgen Project Action Center to contact your representative about this critical legislation.

– Blake Chambers

Photo: Wikimedia Commons

AGOA and MCA Modernization ActThe African Growth and Opportunity Act, or AGOA, was passed into law by the 200th Congress on May 18, 2000. The bill was renewed up to the year 2025 in 2015, during the Obama administration.

The primary purpose of the AGOA legislation is to establish a new trade and investment policy for sub-Saharan Africa, along with expanding trade benefits to the Caribbean Basin. The bill greatly improves the access that sub-Saharan African countries have to the U.S. market.

AGOA seeks to expand U.S. aid to regional integration efforts made by sub-Saharan Africa, strengthening and building upon the private sector in the area, particularly with small businesses and industries owned by women. Encouragement of investment and trade is emphasized by AGOA legislation, as it is indicative of economic development and increased participation in the political process.

To qualify to receive the benefits of AGOA, these countries must follow a set of standards included in the legislation. The eligibility standards include improving its rule of law, following core labor standards and meeting human rights goals. In addition, an acting president has the authority to take away AGOA benefits from any country if it is deemed that a country is not continuing to meet the requirements for eligibility.

“AGOA is AGOA and not just about trade – it’s a relationship framework as I like to say – strategic, military, trade, aid, investment… any costs associated with trade are merely that, minor overheads,” said South African economist and creator of the AGOA.info portal, Eckart Naumann. “The U.S. would be foolish to tamper with this, or withdraw benefits.”

Naumann believes that AGOA has become vital to the interests of the United States along with sub-Saharan African countries. He says that Congress would most likely push back against any efforts to restrict it. U.S. companies and consumers benefit from AGOA due to free-market principles taking effect with both sides profiting from it, and the legislation helps create jobs.

Currently, Congress is considering the AGOA and MCA Modernization Act. The legislation serves as an extension of AGOA, and it promotes policies that foster trade and cooperation while also aiding eligible partners of AGOA. In addition, the AGOA and MCA Modernization Act seeks to create a website that details the benefits of the program, give the Millennium Challenge Corporation more freedom to facilitate trade by permitting up to two compacts within one country and strengthen the accountability of the MCC by making the criteria for reporting requirements stronger. The Millennium Challenge Corporation, which was created through the Modernization Act, provides large-scale grants to help create economic growth opportunities in developing countries eligible for AGOA.

The AGOA and MCA Modernization Act was introduced to the House of Representatives in July as H.R. 3445 and to the Senate as S. 832 in April. Both the House and Senate have not yet made the decision to pass or reject the legislation.

– Blake Chambers

Photo: Flickr

causes of poverty in Côte d'Ivoire
Côte d’Ivoire, or the Ivory Coast, is a former French colony and is located in North Africa. The country’s economy relies heavily on agriculture and processing, with over half of the country’s population working as laborers and farmers. Côte d’Ivoire’s main exports include cocoa, various nuts and palm oil. This low-income country, with 50.9 percent public debt in 2016, has a population estimated at just over 24 million and has a poverty rate of 46.3 percent.

One most recent cause of poverty in Côte d’Ivoire is the production of cocoa which is “highly sensitive to fluctuations in international prices…and to climatic conditions.” Recently, Côte d’Ivoire farmers have been witnessing agricultural diseases among the cocoa plants and trees. Along with decreased crops, around 80 percent of buyers have escaped their contracts with the cocoa farmers, which leaves the farmers with little to no income.

Without payment for the harvested crop, many of these farmers and their families have to survive with nothing. Even if the farmers do receive payment, they earn less than a dollar per day, contributing to the number of people living below the poverty line. Without the proper income, these farmers are facing an inability to buy fertilizers for next year’s production. One farmer states that the soil is old and barren, and without fertilizer, “you can’t grow anything.”

Another cause of poverty in Côte d’Ivoire is the lack of healthcare. Since the civil war in Côte d’Ivoire in 2002, there has been a collapse of resources for people with health issues, including HIV/AIDS. Based on 2016 data, the adult prevalence rate of HIV/AIDS is about 2.7 percent, and about 460,000 people are living with the disease. Côte d’Ivoire is also at high risk of other diseases besides HIV/AIDS.

The absence of sexual education is also to blame for poverty in Côte d’Ivoire. The current rise in population is estimated to continue growing, as about 60 percent of the population is 25 or younger. Furthermore, the fertility rate is approximately 3.5 children per woman, and use of contraception is below 20 percent.

However, there is good news for the country. In June 2012, Côte d’Ivoire received $4.4 billion in debt relief under the Highly Indebted Poor Countries Initiative. Since then, the country’s growth rate has risen to among the highest in the world. To tackle the epidemic of HIV/AIDS and other causes of poverty in the Côte d’Ivoire, several mayors of the nation’s communities joined together with the UNAIDS Executive Director Michel Sidibé to establish the Paris Declaration, which plans to eradicate the disease in Côte d’Ivoire by 2030.

As for the cocoa crisis, sustainability of the fields for production is essential, as well as paying the farmers a livable income. The French Development Agency and Barry-Callebaut, the global leading manufacturer of chocolate, have founded a sustainability strategy called Forever Chocolate in hopes of getting the crisis under control and providing a better future for Côte d’Ivoire farmers.

Furthermore, the Millennium Challenge Corporation (MCC) has selected Côte d’Ivoire “to begin developing a five-year compact,” and the company has committed to helping the country fight its poverty. In conjunction with the MCC, The Borgen Project is advocating the passing of the African Growth and Opportunity Act and Millennium Challenge Act (AGOA and MCA) Modernization Act in Congress. This bill will strengthen and extend programs and aid in Africa if passed. For more information or to contact your Congressperson and show support, visit: https://borgenproject.org/legislation/.

Jennifer Lightle
Photo: Flickr