[Senate Report 112-231]
[From the U.S. Government Publishing Office]
Calendar No. 536
112th Congress Report
SENATE
2d Session 112-231
======================================================================
INCREASING AMERICAN JOBS THROUGH GREATER EXPORTS TO AFRICA ACT OF 2012
_______
November 13, 2012.--Ordered to be printed
Mr. Kerry, from the Committee on Foreign Relations,
submitted the following
R E P O R T
[To accompany S. 2215]
The Committee on Foreign Relations, having had under
consideration the bill (S. 2215) to create jobs in the United
States by increasing United States exports to Africa by at
least 200 percent in real dollar value within 10 years, and for
other purposes, reports favorably thereon and recommends that
the bill, as amended, pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................2
IV. Cost Estimate....................................................5
V. Evaluation of Regulatory Impact..................................8
VI. Changes in Existing Law..........................................8
I. Purpose
The purpose of S. 2215 is to ``to create jobs in the United
States by expanding programs that will result in increasing
United States exports to Africa by 200 percent in real dollar
value within 10 years.'' To achieve this objective, the bill
directs the administration to submit to Congress an interagency
strategy, to improve United States Government staffing for
U.S.-Africa trade, to expand the Export-Import Bank of the
United States financing for projects in Africa, and to ensure
adequate EXIM funding to counter foreign export credit finance
that is noncompliant with agreements of the Organisation for
Economic Co-Operation and Development (OECD).
II. Committee Action
S. 2215 was introduced on March 21, 2012, by Senators
Durbin, Boozman, and Coons. It was discussed at a committee
hearing on July 25, 2012. On September 19, 2012, the committee
ordered S. 2215, with an amendment in the nature of a
substitute, reported favorably by voice vote.
III. Discussion
With a population of approximately 1 billion people, the
African Continent\1\ offers tremendous opportunities to U.S.
companies and investors who are willing and able to overcome
initial obstacles. According to the Office of the United States
Trade Representative, between 2000 and 2010, six of the ten
fastest-growing economies in the world were in sub-Saharan
Africa. In addition, recent reports by the McKinsey Global
Institute\2\ indicate that:
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\1\In some trade and U.S. foreign policy contexts, the term
``Africa'' refers to sub-Saharan Africa (SSA), while North African
countries are considered together with countries in the Middle East.
AGOA preferences, for example, only apply to SSA countries. S. 2215/
H.R. 4221, however, defines Africa as consisting of 54 countries (see
Table A-1 in appendix). These 54 countries include 48 countries in sub-
Saharan Africa, as well as South Sudan, and the North African countries
of Algeria, Egypt, Libya, Morocco, and Tunisia. Within this memo, the
term ``Africa'' refers to all 54 countries in the region, while SSA
refers to all except those in North Africa.
\2\McKinsey Global Institute, ``Africa at work: Job creation and
inclusive growth'' (August 2012); ``Lions on the move: The progress and
potential of African economies'' (June 2010).
Africa has been the second-fastest-growing region in
the world over the past decade (after Emerging Asia),
with gross domestic product (GDP) expected to expand by
4.8 percent in 2012.
Poverty is declining and the number of African
households that joined the consuming classes rose
roughly 50 percent in the past decade (to approximately
90 million).
African economies will profit from rising global
demand for oil, natural gas, minerals, food, arable
land, and other natural resources. However, less than
one-quarter of Africa's GDP growth from 2000 to 2008
came from natural resources, with the bulk of growth
coming from wholesale and retail trade, transportation,
telecommunications, and manufacturing. Thus there are
opportunities in a number of sectors.
The African Continent is estimated to need $72
billion in infrastructure investment per year,
presenting American businesses with significant
openings for investment.
There are, however, a number of challenges that U.S.
businesses face when considering investing or exporting to the
region. The most recent available data suggest that U.S.
exports and investment in Africa account for just 2 percent and
1 percent of the U.S. totals in these areas of activity. Lack
of existing infrastructure, corruption, and capacity shortfalls
can also inhibit investment. Increased assistance from the U.S.
Government to help reduce barriers to American investment and
facilitate entry into markets by U.S. businesses of all sizes
would help companies navigate this process and create American
jobs in the process.
The United States has nine key agencies involved in
promoting U.S. exports and investments in foreign countries,\3\
however, coordination of the activities of these agencies could
be enhanced. This legislation (S. 2215) aims to create jobs in
the United States by expanding programs that will result in
increasing United States exports to Africa by 200 percent in
real dollar value within 10 years. To achieve this objective,
the bill directs the administration to submit to Congress a
coordinated, interagency strategy, to improve U.S. Government
staffing for U.S.-Africa trade, to expand EXIM financing for
projects in Africa, and to seek to ensure adequate EXIM funding
to counter foreign export credit finance that is noncompliant
with OECD agreements. The bill is consistent with President
Barack Obama's Presidential Policy Directive, ``U.S. Strategy
Toward Sub-Saharan Africa,'' which encourages U.S. companies to
trade with and invest in Africa.
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\3\These are the U.S. Departments of Agriculture (USDA), Commerce,
State, and the Treasury, as well as the Export-Import Bank (EXIM), the
Overseas Private Investment Corporation (OPIC), the U.S. Trade and
Development Agency (TDA), the Small Business Administration (SBA), and
the U.S. Trade Representative (USTR). Export promotion activities
include providing export financing and advocacy assistance to U.S.
companies to overcome information and market entry barriers.
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A section-by-section discussion of the legislation follows.
Section 2
Section 2 includes the findings, noting the importance of
exports to U.S. businesses and workers, the need for improved
coordination among government agencies involved in export
promotion, the support that competitors to U.S. firms receive
from their governments, and the rapidly expanding opportunities
in Africa available to foreign investors and exporters.
Section 3
Section 3 defines the terms used in the bill.
Section 4
Section 4 requires the administration to submit to Congress
a coordinated, interagency strategy, not later than 180 days
after the date of the enactment of this Act, to expand U.S.
exports to Africa by 200 percent in real dollars over the next
decade. A progress report is also required after 3 years to
assess the success of the strategy.
The administration is directed to focus the strategy on:
(i) increasing exports of United States goods and services to
Africa by 200 percent in real dollar value within 10 years;
(ii) promoting the alignment of United States commercial
interests with development priorities in Africa; (iii)
developing relationships between governments in Africa and U.S.
businesses that possess expertise in such issues as
infrastructure development, technology, telecommunications,
energy, and agriculture; (iv) improving the competitiveness of
U.S. businesses in Africa, including the role the African
diaspora can play in enhancing such competitiveness; (v)
exploring ways that African diaspora remittances can help
communities in Africa tackle economic, development, and
infrastructure financing needs; (vi) promoting economic
integration in Africa; (vii) encouraging a greater
understanding among U.S. business and financial communities of
the opportunities Africa holds for U.S. exports; and (viii)
monitoring the financing terms available to U.S. businesses
relative to the terms made available to foreign firms by their
governments.
In developing the strategy, the President is required to
consult with Congress, each U.S. agency that is involved in
trade promotion or development, the World Bank Group and the
African Development Bank, businesses, nongovernmental
organizations, and African diaspora groups.
Section 5
To improve the coordination of the U.S. agencies involved
in the promotion of U.S. exports and investment abroad, section
5 creates a Special Africa Export Strategy Coordinator (i) to
oversee the development and implementation of the strategy
required by section 4; and (ii) to coordinate with the trade
promotion and development agencies with respect to developing
and implementing the strategy.
Section 6
Section 6 states the sense of Congress that, not later than
1 year after the date of the enactment of this Act, the
Secretary of Commerce and other high-level officials of the
U.S. Government with responsibility for export promotion,
financing, and development should conduct a joint trade mission
to Africa.
Section 7
To offset the impact of past under-resourcing of commercial
programs focused on Africa, and to help U.S. companies more
effectively to seize new opportunities on the African
Continent, section 7 directs several agencies to allocate
adequate personnel and to ensure adequate information
technology systems to implement the strategy.
The Secretary of Commerce is directed to ensure that not
less than 12 Commercial Service officers are assigned to U.S.
embassies in Africa for each of the 5 fiscal years beginning
after enactment of this Act. The Secretary of Commerce is also
directed, as soon as practicable after enactment of this Act,
to assign not less than one full-time Commercial Service
officer to the Office of the U.S. Executive Director at the
World Bank and the African Development Bank.
The Export-Import Bank of the United States (``EXIM'') is
directed (i) to increase the number of staff who spend the
majority of the year based in Africa and increase the number of
business development trips it conducts in Africa; (ii) to
increase, to not less than 30, the number of employees assigned
to U.S. field offices to work in coordination with the related
export efforts undertaken by the Small Business Administration
regional field offices; and (iii) to upgrade its equipment and
software to process and track applications for financing more
expeditiously, effectively, and efficiently.
The Overseas Private Investment Corporation (``OPIC'') is
directed to increase, by not more than five, the staff needed
to promote stable and sustainable economic growth and
development in Africa, to strengthen and expand the private
sector in Africa, and to facilitate the general economic
development of Africa, with a particular focus on helping
United States businesses expand into African markets. OPIC
shall also report to Congress on whether recent technology
upgrades have resulted in more effective and efficient
processing and tracking of applications for OPIC financing.
Section 7 also includes a rule of construction making clear
that nothing in the section shall be construed as permitting
the reduction of Department of Commerce, Department of State,
EXIM, or OPIC personnel or the alteration of planned personnel
increases in other regions, except where a personnel decrease
was previously anticipated or where decreased export
opportunities justify personnel reductions.
Section 8
Section 8 directs the President to develop a plan (i) to
standardize the training received by Commercial Service
officers, economic officers of the Department of State, and
economic officers of the U.S. Agency for International
Development with respect to the programs and procedures of
EXIM, OPIC, the Small Business Administration, and the U.S.
Trade and Development Agency; and (ii) to ensure that, not
later than 1 year after enactment of this Act all Commercial
Service officers that are stationed overseas receive the
training and, in foreign posts to which no Commercial Service
officer is assigned, any economic officer of the Department of
State stationed in that country receive that training.
Section 9
Section 9 provides more specific guidance to EXIM on the
financing that it makes available to U.S. firms by expressing
the sense of Congress that foreign export credit agencies are
providing non-OECD arrangement compliant financing in Africa,
and that in order to counter such actions and ensure U.S. jobs,
EXIM should provide timely financing to meet such terms, as
appropriate.
Section 9 amends section 6(a) of the Export-Import Bank Act
of 1945 (12 U.S. C. 635e(a)) by requiring EXIM (i) to increase
the amount it finances to Africa over the prior year's
financing for each of the first 5 fiscal years beginning after
enactment of this Act; and (ii) not later than 1 year after
enactment of this Act, and annually thereafter for 5 years, to
report to Congress if EXIM has not used at least 10 percent of
its lending capabilities for projects in Africa.
Section 9 also directs EXIM to make available annually such
amounts as are necessary for loans that counter trade
distorting non-OECD arrangement compliant financing or
preferential, tied aid, or other related nonmarket loans
offered by other nations to their firms for projects in which
U.S. companies are competing or interested in competing.
Finally, section 9 requires, not later than 1 year after
enactment of this Act, and annually thereafter for 5 years,
EXIM to report to Congress if the Bank has not used at least
$250,000,000 annually for loans that counter non-OECD
arrangement compliant financing offered by other nations to
their firms.
Section 10
Section 10 makes technical and conforming amendments to
section 22(b) of the Small Business Act (15 U.S.C. 649(b)).
Section 11
Section 11 states that, where applicable, the President
shall explore opportunities to negotiate bilateral,
subregional, and regional agreements that encourage trade and
eliminate nontariff barriers to trade between countries. It
also states that with respect existing agreements between the
United States and countries in Africa, the President shall
ensure that the agreements are being implemented in a manner
that maximizes the positive effects for U.S. trade, export, and
labor interests as well as the economic development of the
countries in Africa.
IV. Cost Estimate
In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the committee provides this
estimate of the costs of this legislation prepared by the
Congressional Budget Office.
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 26, 2012.
Hon. John F. Kerry,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2215, the Increasing
American Jobs Through Greater Exports to Africa Act of 2012.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sunita
D'Monte.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
S. 2215--Increasing American Jobs Through Greater Exports to Africa Act
of 2012
Summary: S. 2215 would expand federal programs and
initiatives to promote exports to Africa. CBO estimates that
implementing the bill would have discretionary costs of $24
million over the 2013-2017 period, assuming appropriation of
the necessary amounts.
Pay-as-you-go procedures do not apply to this legislation
because it would not affect direct spending or revenues.
S. 2215 contains no intergovernmental or private sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 2215 is shown in the following table.
The costs of this legislation fall within budget functions 150
(international affairs) and 370 (commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars
-----------------------------------------------------
2013-
2013 2014 2015 2016 2017 2017
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Trade Financing Agencies:
Estimated Authorization Level......................... 2 2 3 3 3 13
Estimated Outlays..................................... 2 2 3 3 3 11
International Trade Administration:
Estimated Authorization Level......................... 3 2 2 2 2 12
Estimated Outlays..................................... 2 2 2 2 2 11
Trade Promotion Strategy:
Estimated Authorization Level......................... * * * * * 2
Estimated Outlays..................................... * * * * * 2
Total Changes:
Estimated Authorization Level......................... 5 4 5 5 5 27
Estimated Outlays..................................... 4 4 5 5 5 24
----------------------------------------------------------------------------------------------------------------
Notes: Components may not sum to totals because of rounding.
* = less than $500,000.
Basis of estimate: For this estimate, CBO assumes that S.
2215 will be enacted early in fiscal year 2013, that the
necessary amounts will be appropriated each year, and that
outlays will follow historical spending patterns for existing
programs.
Trade Financing Agencies
Section 7 of the bill would require the Export-Import Bank
of the United States (Ex-Im) and the Overseas Private
Investment Corporation (OPIC) to increase their staffing levels
to promote trade and investment in Africa. Based on information
from those agencies, CBO estimates that Ex-Im would hire three
additional employees to serve overseas at an annual cost of
about $350,000 per person and two additional employees to serve
in the United States at an annual cost of about $200,000 per
person, and that OPIC would require five additional employees
at an annual cost of about $200,000 per person. In total, those
additional personnel would require annual appropriations of $2
million to $3 million a year, and would cost $11 million over
the 2013-2017 period, assuming appropriation of the necessary
amounts. Section 9 would require Ex-Im to increase its activity
in Africa or to report annually to the Congress if it cannot
provide at least 10 percent of its financing to that region.
Ex-Im currently provides about 5.5 percent of its financing to
Africa. Because the bill would not increase the overall cap on
Ex-Im's financing, implementing that provision would require
the bank to reduce its financing to other regions of the world.
New financing provided to Africa could be more or less risky
than financing in other regions and could therefore increase or
decrease the appropriations needed to cover Ex-Im's subsidy
costs; however, CBO has no basis for estimating the net effect
of such changes in the bank's financing.
Finally, section 10 would require Ex-Im to increase its
tied aid to Africa or to report annually to the Congress if it
cannot provide at least $250 million each year in such loans to
Africa. Tied aid is a form of concessional lending that
requires the recipient to buy goods or services from the donor.
Ex-Im has $178 million in funding for tied aid, but over the
last five years Ex-Im has made only one such loan worth $23
million (of which $8 million was concessional financing).
Under long-standing guidelines jointly developed and
implemented by Ex-Im and the Department of the Treasury, Ex-Im
does not unilaterally initiate such loans; instead, it can
counter offers made by other countries. There are evidentiary
requirements and other thresholds that have resulted in very
few loans being made. The bill does not alter those conditions
and based on information from Ex-Im, CBO estimates that Ex-Im
is unlikely to increase its tied aid or meet the bill's goal of
$250 million each year in tied aid. CBO further estimates that
the annual report to the Congress would cost less than $500,000
over the 2013-2017 period, assuming the availability of
appropriated funds.
International Trade Administration
Sections 7 and 8 would increase costs to the International
Trade Administration (ITA) by raising the number of foreign
commercial service officers that are assigned to Africa,
requiring additional staff to be placed at the African
Development Bank, and requiring the agency to develop a
training program for foreign commercial service and economic
officers with respect to programs of the Ex-Im, OPIC, the Small
Business Administration, and the United States Trade and
Development Agency.
Based on information from the ITA, CBO estimates that the
agency would open a new post in Africa and hire two additional
foreign commercial service officers to serve in Africa at a
cost of about $2 million per year, and hire one additional
officer to serve at the African Development Bank at a cost of
about $400,000 per year for salaries and administrative
support. In addition, CBO estimates that providing training for
foreign commercial service and economic officers would cost
about $400,000 to develop the curriculum and to cover the costs
incurred by attendees to travel to a central location to
receive the training. Taken together, CBO estimates that
implementing those provisions would cost $11 million over the
2013-2017 period, assuming appropriation of the necessary
amounts.
Trade Promotion Strategy
Section 4 would require the President to designate a
special coordinator to develop a strategy and implement a
strategy to promote exports to Africa. Based on information
from the ITA, CBO estimates that implementing those provisions
would cost less than $500,000 a year over the 2013-2017 period,
assuming the availability of appropriated funds.
Pay-as-you-go considerations: None.
Intergovernmental and private sector impact: S. 2215
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Sunita D'Monte and
Susan Willie; Impact on State, Local, and Tribal Governments:
J'nell L. Blanco; Impact on the Private Sector: Marin Randall.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis.
V. Evaluation of Regulatory Impact
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. Changes in Existing Law
In compliance with Rule XXVI, paragraph 12 of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in
italic, existing law in which no changes are proposed is shown
in roman).
TITLE 12--BANKS AND BANKING
Chapter 6A--Export-Import Bank of the United States
SUBCHAPTER I--GENERAL PROVISIONS
* * * * * * *
SECTION 635E. AGGREGATE LOAN, GUARANTEE, AND INSURANCE AUTHORITY
(a) Limitation on Outstanding Amounts.--(1) In general.--
The Export-Import Bank of the United States shall not have
outstanding at any one time loans, guarantees, and insurance in
an aggregate amount in excess of the applicable amount.
(2) Applicable amount.--* * *
* * * * * * *
(3) Subject to appropriations.--* * *
(4) Percent of financing to be used for projects in
Africa.--The Bank shall increase the amount it finances to
Africa over the prior year's financing for each of the first
five fiscal years beginning after the date of the enactment of
the Increasing American Jobs Through Greater Exports to Africa
Act of 2012.
* * * * * * *
TITLE 15--COMMERCE AND TRADE
The Small Business Act
* * * * * * *
Chapter 14A--Aid to Small Business
* * * * * * *
SECTION 649. OFFICE OF INTERNATIONAL TRADE
(a) Establishment.--
(1) Office.--There is established within the
Administration an Office of International Trade which
shall implement the programs pursuant to this section
for the primary purposes of increasing.--
(A) the number of small business concerns
that export; and
(B) the volume of exports by small business
concerns.
(2) Associate Administrator.--The head of the Office
shall be the Associate Administrator for International
Trade, who shall be responsible to the Administrator.
(b) Trade Distribution Network.--The Associate
Administrator, working in close cooperation with the Secretary
of Commerce, the United States Trade Representative, the
Secretary of Agriculture, the Secretary of State, the President
of the Export-Import Bank of the United States, the President
of the Overseas Private Investment Corporation, Director of the
United States Trade and Development Agency, the Trade Promotion
Coordinating Committee, and other relevant Federal agencies,
small business development centers engaged in export promotion
efforts, Export Assistance Centers, regional and district
offices of the Administration, the small business community,
and relevant State and local export promotion programs, shall--
(1) maintain a distribution network, using regional
and district offices of the Administration, the small
business development center network, networks of
women's business centers, the Service Corps of Retired
Executives authorized by section 637 (b)(1) of this
title, and Export Assistance Centers, for programs
relating to--
(A) trade promotion;
(B) trade finance;
(C) trade adjustment assistance;
(D) trade remedy assistance; and
(E) trade data collection;
(2) aggressively market the programs described in
paragraph (1) and disseminate information, including
computerized marketing data, to small business concerns
on exporting trends, market-specific growth, industry
trends, and international prospects for exports;
(3) promote export assistance programs through the
district and regional offices of the Administration,
the small business development center network, Export
Assistance Centers, the network of women's business
centers, chapters of the Service Corps of Retired
Executives, regional offices of the Export-Import Bank,
State and local export promotion programs, and partners
in the private sector; and
* * * * * * *