An Economic Plan for Africa

The Clinton administration has worked surreptitiously to ensure the demise of a World Bank proposal permitting the world's poorest countries to sell goods to the United States and other wealthy nations without tariffs or import quotas. The administration's maneuvers stem from the fear that, in this time of high U.S. trade deficits, such a proposal to fling open U.S. markets would hinder efforts to normalize trade with China and frighten Congress into withdrawing its tentative support of an African trade bill currently under debate.

This bill, the African Growth and Opportunity Act, would give sub-Saharan African countries duty-free access to the U.S. textile market, a self-help strategy that should prove much more successful than the current foreign aid policy of loaning money or forgiving debts. Although the bill should be welcomed with some reservations, the Clinton administration was still correct in its decision to sacrifice the World Bank proposal in order to ensure the bill's passage. While the more modest African Growth and Opportunity Act actually has a good chance of being enacted, the World Bank proposal is not only ill-timed but also lacks the support of most of its major donors, the largest of which is the U.S.

Nonetheless, the African trade bill could benefit from the impractical idealism of the World Bank proposal. The bill has had so many "protections" for American companies added by the U.S. textile lobby that many of the bill's original benefits now cannot be realized. The most harmful new stipulation is that African companies hoping to gain duty-free access to the U.S. textile market must buy American fabrics. The cost of buying and then shipping the fabric to Africa would be so prohibitively expensive that only the largest companies could afford to do so. Indeed, the most likely scenario is that textile factories currently using cheap labor in Asia will move to Africa, which would offer even cheaper labor as well as duty-free access to the U.S. market.

Although the bill would only apply to companies that comply with international labor laws, this scenario raises questions about exploitation and whether increasing business for large companies is the best way in which to develop poorer countries. For example, factories often lift the economy by providing new jobs, only to devastate it when they leave a few years later, having found cheaper labor elsewhere. However, although African textile unions object to the mandate to buy American fabrics, they overwhelmingly support the bill, which they hope will lead to increasingly more open markets. Indeed, the bill has the cross-cultural appeal of providing a labor boost for Africa while scarcely affecting jobs in the U.S.

The administration's opposition to the World Bank proposal, however, comes at a tense time, when the gap between the richest and the poorest countries is rapidly increasing. Poorer nations blame this disparity on the U.S. and other highly developed countries, which have left them far behind in the race towards economic globalization. Thus, the new trend reflected in both the World Bank proposal and the African trade bill, both of which aim to increase exports from the world's poorest countries, must be applauded. Loans--the standard approach to foreign aid--often prove ineffective at best and detrimental at worst to underdeveloped countries, leading to a dependency on loans and an enormous debt.

But the U.S. and other countries cannot only forgive debts, as they have recently begun to do. The most effective way to lift nations out of poverty is by stimulating their economies and increasing their exports by opening up international markets to them. But the U.S., like many other countries including Japan and France, remains highly sensitive to opening its markets, particularly for agricultural imports. In this time of decreasing foreign aid, this attitude becomes less and less acceptable. Only by combining debt relief with efforts to increase exports from the poorest countries will the U.S. and other wealthy countries fulfill their obligation to make economic globalization truly worldwide.