THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release June 17, 1997
PRESS BRIEFING BY
DEPUTY NATIONAL SECURITY ADVISOR JIM STEINBERG;
ASSISTANT TO THE PRESIDENT FOR INTERNATIONAL ECONOMICS, DAN TARULLO; DEPUTY US TRADE REPRESENTATIVE JEFF LANG; DEPUTY SECRETARY OF THE TREASURY LARRY SUMMERS
The Briefing Room
3:00 P.M. EDT
MR. TARULLO: Good afternoon, everyone. We just had, I think, a very energetic and extraordinarily attended event on the Africa trade and investment initiative up in Room 450. We're here to provide additional background information for you, though it is an on the record providing of information.
I thought I would just start very briefly by indicating the premises on the basis of which we have proceeded with the Africa trade and investment initiative of the administration, the legislation we're working on with the members of Congress whom you saw in Room 450 today, and the programs and policies which the president will be discussing with his counterparts at the Summit of the 8 in Denver this weekend.
The premises are really essentially three: First, that Africa is not, and particularly Sub-Saharan Africa, is not monolithic. There are different economies; there are different sets of policies; there are different performances.
The second point which derives from that is that there are actually some extraordinary success stories in Africa. There are countries, which the President mentioned, which are growing at double-digit rates. There are a number of countries which sustained growth rates of five percent or so.
Third, there is a clear recognition that, important as development assistance is for meeting basic human needs, it is not, in and of itself, adequate to propel the Sub-Saharan African countries to a greater stage of development. On the contrary, there's a growing recognition that market reforms, trade liberalization, and sound macroeconomic policies are essential to lay the groundwork for development.
That's really the basis upon which we've put together our own program. As you heard from the members of Congress, it's the basis upon which they've drafted their legislation. And as I think you'll see this weekend, it's the basis for our discussion with our counterparts from the other members of the 8.
What we're going to do in the rest of this briefing is have three short presentations -- one by Larry Summers, who has just returned from Africa. The fact is we've been discussing this initiative with African leaders, officials from the outset. Larry went to Africa and has the most recent information about their reactions to what we're doing. And Jeff Lang, from the Deputy U.S. Trade Representative, will discuss the trade elements of our approach. And finally, Jim Steinberg, the Deputy National Security
Advisor, will brief on the security and political aspects of what we're doing.
MR. SUMMERS: I just returned from Africa two weeks ago where I represented the United States at the annual meeting of the African Development Bank and met with finance ministers of a substantial number of African countries.
What I was struck by was that a new wind is blowing through Africa. It was there in the standing room only conference that attracted 600 people to discuss private investment opportunities in Africa. It was there in the recommendation by a major Wall Street firm of the T-bills issued by a number of different African governments. It was there in the entrepreneurs investing U.S. pension fund money in private African infrastructure. It was there in the sense that with the dramatic changes in South Africa, there was the real prospect that the southern part of the African continent could lead the entire continent towards prosperity. It was there when I visited Mozambique, by some measures the poorest country in the world, and met the competing Internet providers to that country.
So, while there is a very long way to go, what I was struck by was that the leadership of a number of countries were on to the program of market-oriented reform and wanted more than anything else to have the same kind of dialogue with the government of the United States or with the governments of the G-7 countries that the nations of Latin America do -- dialogue that is finance minister to finance minister, trade minister to trade minister, commerce minister to commerce minister -- rather than between their government and the providers of foreign aid. And I was left very much encouraged by the success stories that there already are, and by the sense that there may well be many more success stories that can show Africa in the years ahead.
I might just conclude with one note that made a very deep impression on me. I was struck in each of the countries I visited and in many of the meetings that I attended by how much Ron Brown's work in Africa had meant. The number of people who said that what Ron Brown did was very special, that he was the first American official who came here to do business, not to do charity, and how important that had been to them and how important it was to them that the United States continue the work that Ron Brown started. And I think what the event here today was really all about was carrying on that effort to bring trade and investment all over the world, and especially to Africa.
Q How much does this -- down beyond the entrepreneurs and investors?
DEPUTY SECRETARY SUMMERS: Let me answer this one question and then I think there are other presentations. In nearly three countries in Sub-Saharan Africa in the last year, you saw positive economic growth and increases in living standards. It was the best economic performance for Africa in a decade. Meetings that I visited were in Cote d'Ivoire where living standards have been rising at a few percent a year for the last several years. We had an opportunity to visit Mozambique where standards of living are increasing at a rate where, if it was sustained, you would see living standards almost double within a decade. And you saw that in new schools, in villages that had access to better water than they had had before.
So there is a very long way for Africa to go after a couple of decades that have been very difficult. But I think there are quite a number of encouraging indicators. And it's not just about money for a few investors, it's really about higher standards of living.
MR. LANG: On the trade front, I should say that we have been consulting in detail with Africans for some time now. We met with them at an interagency group at the Singapore ministerial of the World Trade Organization. I think we were the only industrialized country to meet with African trade ministers. We had 35 of the 48 Sub-Saharan ministers attending, and representatives of all the other governments. We've spoken with them in Geneva and here in Washington repeatedly over the last year in designing the program.
Let me just say with respect to the substance of this thing, I want to emphasize what Dan said about the diversity of the region. We do have 48 countries; it's a population of 700 million, but there are differences between the countries. And the program, both the one that's being designed on the Hill and the program here, are identical in the fact that they allow increased trade benefits for countries throughout the region that are least developed, and there are more least-developed countries in Sub-Saharan Africa than any other region of the world.
But, in addition, for those countries that undertake reform, such as opening their markets to investment and binding substantial sections of their tariff schedules at reasonable rates of duty, there will be additional trade access benefits here in the United States under these programs. So that should make it attractive for countries to move toward reform. And that's the object of the exercise; to emphasize and reinforce the interest Africans themselves have expressed to us repeatedly in opening up their economies. The rates of growth they want to achieve will be achieved when they open up to trade and investment. And we're trying to reinforce that by giving them even greater access to the United States than they already have, which is substantial.
MR. STEINBERG: Let me just say a word about what we're doing on the security side which is really a complement to the long-term strategy that goes behind the strategy for economic growth and investment that my colleagues have talked about. There are obviously a number of areas of concern and conflict in Africa. And the international community has been involved in a variety of ways over the past couple of years, through U.N. efforts as in Mozambique and Angola, and also in supporting regional efforts such as what the west African states are doing in Liberia.
It's been increasingly clear to both Africans and us that there is a real need for strengthening Africa's own ability to provide leadership and capabilities in trying to deal with conflict management and conflict prevention. And last year, the President launched his initiative on developing an Africa crisis response force and developing and strengthening the capabilities of African countries themselves to provide peacekeeping and other conflict prevention support. This has already won considerable support among the African countries.
We've been working very closely with the OAU and sub-regional organizations. And at Denver this year, under the President's initiative, the 8 are going to take a further step to coordinate their efforts to try to support this and, in fact, a number of donor countries, including Europeans, have also been interesting in finding ways to support Africa's indigenous capabilities.
And at the summit, we will see a statement by the 8 indicating their intention to try to coordinate their efforts and to try to strengthen the ability of African countries, particularly working through African regional and subregional organizations, to try to develop their own abilities to work together to try to deal with conflict prevention, and this will be an important complement to the economic side of the Africa agenda.
MR. TARULLO: Questions? Yes.
Q The change in strategy towards encouraging investment, is this the first step in that, or have there been a series of steps leading up to this package?
MR. TARULLO: Larry should supplement this from the vantage point of our participation in the international financial institutions where I think over the years we have been shifting emphasis. In terms of the administration's position, we've taken a series of steps over the course of the last couple of years to try to promote trade and investment with Africa. Part of that is through simply raising the awareness of a lot of U.S. businesses about the potential in a number of African countries. You saw today some CEOs from some large American companies. They probably are still not in the majority in terms of people recognizing that there is differentiation, there are opportunities. And, indeed, there was a White House conference held just to that end.
There have also been efforts within OPIC, for example, in an informal way and some of the other trade promoting institutions. And, of course, when Secretary Brown made his trips to Africa, he was very much carrying this message.
Q There was a White House conference on this?
MR. TARULLO: There was an investment conference that was already sponsored sometime ago, yes.
Q How many trips did Secretary Brown make to Africa?
MR. TARULLO: There's at least two that I'm aware of, but I don't honestly know how many more. Four? Susan says four total.
Q Traditionally, there hasn't been much interest from private investors in investing in infrastructure like roads, railroads and the like, but this has been generally a prerogative of governments which have helped to attract private business. According to your plan, do you think that private investors will go into these fields, or will this be provided through the increased bilateral aid, which is --
MR. TARULLO: Larry was just at this infrastructure conference. Why don't you take this question?
DEPUTY SECRETARY SUMMERS: I think in general in the developing world you're seeing a change in traditional patterns in infrastructure finance. And you're seeing more emphasis on private investment in electric utilities; in some cases, in private toll roads; in many cases, in private water supplies systems; and in a very large number of cases, privatization of telecommunications infrastructures. And you've seen a number of African countries privatize their phone companies or with plans to privatize their phone companies.
And so I think there is substantial scope for private sector investment in infrastructure, particularly if there can be a stable regulatory framework. And this is something that in Africa, but more generally around the world, in which the United States has encouraged -- and I think encouraged with some success -- the international financial institutions to become increasingly involved in. The International Finance Corporation at the World Bank has helped to support a number of deals by being prepared to take a stake in them. And the World Bank has been increasingly active in providing guarantees.
One thing that is part of this program, which represents a continuation of an effort that really took a major step forward at last year's summit, is the debt relief for a number of the most highly indebted countries. By writing off the debt or a substantial part of the debt to the international financial institutions and by making adjustments on debt burdens to the United States and other industrialized countries, you create a situation where the incentive for investment is greatly enhanced because profitable investments can be used to pay off investors rather than being used to serve old debts. So one of the reasons why we think debt relief is most important is because it reduces the debt overhang and in that way encourages private investment.
When I was in Mozambique, the GNP of Mozambique is less than $2 billion, but the expectation was that it would attract a few hundred million dollars in private investment each year for the next couple, which represents a very substantial fraction of GDP much larger than most other developing countries.
Q And what do you do about that? I mean, is there any more commitment to a deeper debt relief than you had done before or not?
DEPUTY SECRETARY SUMMERS: Uganda recently received the -- was the first country to benefit from the debt relief from the so-called HIPC initiative -- highly indebted poor countries -- and we expect that in coming months, several other African countries will benefit from that initiative. As one component of this initiative, the President will seek congressional funding to extinguish the concessional debt owed to the United States by highly indebted African countries that are meeting stringent conditions for economic reform.
MR. TARULLO: One other piece on the infrastructure, which is that part of the program would create a half billion OPIC fund to support private infrastructure investments in Africa.
Q Security question: How concerned is the United States about the situation in the former Congo -- excuse me, in the former Zaire? What -- is there anything encouraging that's happening there from the U.S. perspective? And would this African security arrangement that you described have made any difference in that situation?
MR. STEINBERG: I think there's an opportunity there. And I think that one of the things that we are trying to do is try to work with the new leadership in the former Zaire, in the Democratic Republic of the Congo to try to seize that opportunity.
There is with the change in government with there, I think we are trying to emphasize the need to move on to a transition process, to an elected government, to open elections, and to really open the doors to economic investment, the kinds of things my colleagues have been talking about today.
As you know, Ambassador Richardson has already twice met with Mr. Kabila to indicate both our willingness to work wit this new government to try to move forward and provide assistance as they begin to make progress both in democratic reform, in dealing with the human rights issues that we're concerned about there and the economic reforms and we're pushing very hard, because we do think that with the change there, there is a chance that there can be a greater opportunity. It's a country with great riches and great possibilities which have not been seized from the people of that country for a long time.
Q What is his reaction?
MR. STEINBERG: I think the conversations have been very positive. I think that Ambassador Richardson has come away with a sense that there is an understanding of the need to move forward, but we've made clear that we're going to be looking for that to be demonstrated in his actions and not just in what he has had to say.
Q How much is the African debt that we'll be asking Congress to forgive, and is there going to be an effort at Denver to get the other G-7 countries to do an equal specific amount of debt relief, or just a general statement in behalf of debt relief?
MR. TARULLO: I can begin answering the second part of the question and we'll get to the answer to the first in a moment. We have already been working with our G-7 partners on the HIPC debt initiative, and what we are looking for at Denver is a reinforcement of the commitment of those partners to move forward deliberately to follow the example with Uganda and do a debt reduction plan for other of the African Countries. What we're basically looking for here is some more momentum for a program whose terms and the approach for which have been agreed upon.
Larry, do you want to answer the first part?
ASSISTANT SECRETARY SUMMERS: I can't give you a specific number because it depends upon how many countries meet the eligibility criteria and over what time period the countries meet the eligibility criteria. What I can do is say that as an example, the debt relief that has been provided to Uganda will provide some $340 million that otherwise would have been paid as debt service that is instead available to the Ugandan budget to meet crucial expenditures in health, education and other priorities.
Q Larry, could you elaborate on what Ron Brown did when he was over in Africa?
ASSISTANT SECRETARY SUMMERS: He did a number of things. I think that the two most important -- two of the most important things that he did was he went and he met with his counterparts in Africa in the same way that he went and met with his counterparts in Asia or in Latin America, and that had not been the previous pattern for U.S. economic officials to come and discuss the business environment and discuss particular deals and particular business opportunities in particular countries when they visited Africa in the way that they did when they visited other continents.
Second, he didn't come alone. He came alone with delegations of businessmen, businessmen seeking to export products to African markets, businessmen looking for investment opportunities. For example, in the Cote d'Ivoire, Secretary Brown had visited Cote d'Ivoire in 1995. At the time of his visit, there were approximately 40 American companies doing business in Cote d'Ivoire. Two years later, in part as a consequence of the consciousness-raising that his trip achieved and in part as a consequence of the continued economic reform in Cote d'Ivoire, we were told that there were about 85 companies who were doing business in Africa.
So I think what he did was, he focused -- helped to focus African governments on the important opportunity to do business with America, and he focused American business on the opportunity to do business with Africa.
Q Can you put some of the dollar figures into context for us? I mean, a half a billion dollars in the U.S. context for an entire continent doesn't sound on the surface to be a lot of money. Is that --
MR. TARULLO: Well, remember, it's leveraging private finance at the same time in OPIC. It depends on how the deals go. But the multiplier effect would be significant. If the -- remember, it's important to go back to a point that Jeff Lang made and that others have alluded to. We can't make Africa development. We can't make it happen. What we can do is to provide support for adoption and maintenance of the kinds of policies which will produce development in African countries. We can do that through trade, we can do it through ensuring investments, we can do it through our policies in the multilateral lending institutions.
But ultimately -- and this is a message which I think all of us continue to hear from African economic officials -- ultimately, their policies are necessary for a sound basis for development. What we can do is to make sure that those policies have an outlet in trade and investment in the rest of the world.
Q Are you signing on to the same formula as the McDermott bill and the special access preferences for textiles and leather goods?
MR. TARULLO: There are still -- on some of the trade items including those, we still are talking about exactly about how those provisions should be drafted. As you know, the world has a complicated set of rules for textile trade, and we're trying to make sure that we align the kinds of preferences that we're offering in a variety of areas to a variety of developing countries. But I think that on the basis of the conversations thus far, we'll come to a meeting of the minds on that fairly soon.
Q Did the First Lady have any role in the development of this policy? I notice there was a collection of her speeches passed out.
MR. TARULLO: The First Lady has certainly had extensive discussions with a number of us about her experiences, what she saw in Africa and have gone back and forth on the kinds of programs from -- particularly on microenterprises and some of the smaller economic development initiatives, and so I think the answer is yes, there has been an interactive role to a process that was already going on.
Q How much pressure will the U.S. put on African countries to reform, politically speaking?
MR. TARULLO: To reform in political terms?
Q Yes, because we've given aid to countries such as Kenya for a long time, and yet Kenya is an extraordinary corrupt and undemocratic country.
MR. STEINBERG: I think we've been very deeply involved in that, and I think that one of the things in our initiative here is that while the focus is on economic reforms as for the enhanced benefits of the thing -- that we do reserve the right to take into account broader considerations. And that remains a part of our overall strategy.
There are different elements to this, obviously. There are conditions for what the IFFYs do in terms of their assistance and what the United States does in our bilateral aid. But it's very much a part of our overall bilateral assistance program to look at these things and to make sure that, as we move forward, that they're linked to a broad range of reforms.
And I think though they're obviously -- further progress needs to be made with a number of countries, we make that very much a part of the decision as AID and other aspects of our bilateral assistance goes forward.
Q -- in Uganda, I mean, that is not a democratic country.
MR. STEINBERG: I mean, the good is not the enemy -- the best should not be the enemy of the good here. There have been considerable progress. And we do insist on progress. We don't expect it all to be accomplished overnight. But at the same time, we do look for further reforms. I mean, it's all relative. If you look at where Uganda has come from, I think you -- whatever the continued issues there, it is certainly a dramatic improvement over what we saw not too long ago in Uganda.
And I think there had been steady progress in those countries, and those were precisely the countries we have supported. If you look at some of the real success stories in countries like Mali, like what we are seeing now in Mozambique, that our efforts --although our aid is not unlimited -- we do very much target it to try to assist in those things. And much of the aid that we give is directed precisely at those things -- at promoting democratization, at grass-roots kinds of efforts. So I would say, it's very much central to our overall assistance program.
Q In terms of the trade liberalization, are we going to open our markets here in the United States without receiving a similar commitment from other countries to the G-8?
MR. LANG: No, on the first benefit, the generalized system of preferences, there are a series of statutory qualifications for countries that get that benefit. What we're doing is expanding that benefit by about 20 percent of our tariff schedule line items for the least developed countries in the region -- of the 48 countries, I think around 30 are least developed.
For the countries that undertake the more ambitious reforms, we will get reciprocal benefits in the sense that they will undertake obligations in the World Trade Organization which they have not yet undertaken because most of them came out of the Uruguay Round with very few tariff bindings. A few countries did have many, but most did not. So we will get access to their markets, but so will the rest of the world. And that's why the President is taking this matter to the G-8.
Q Could I just follow on that? In terms of what you're seeking from the other G-7 members, are you looking for -- in addition to debt relief, are you looking for other trade aspects of what -- from the G-7 numbers, trade benefits?
MR. TARULLO: What we're basically asking is that each country with its own system of trade preferences and approach to trade preferences move forward on providing more for Africa -- greater access, greater encouragement to market reform development and the exports that come with it. So we're not seeking a harmonized system where everybody would do the same thing. We don't -- that would probably lead to delays. What we're seeking instead is that everybody move forward.
Q To what extent does world protectionism prohibit African development? Do they have a lot to gain from the removal of trade protections in the developed world?
MR. LANG: Well, they have something to gain. But the question does tap into an important element of this. In the United States, for example, half our schedule will be at zero in six years under the Uruguay Round cuts, and we also provide zero benefits beyond that to developing countries. Nonetheless, we are going to try and extend the benefit as far as possible in order to give them as many opportunities of access to our market. And we're hoping that these countries that undertake the most ambitious reform will find that, along with the coordinated benefits from the international financial institutions, an attractive incentive to undertake those benefits.
I might say that the interagency nature of this initiative, coordinating both the international financial institutions and trade, is in many ways a first in any government and an important part of the initiative. The interplay between those incentives is very important for those especially ambitious countries.
Q Does this trade liberalization go forward without getting like Japan and Europe et cetera to lower their barriers -- do we go ahead even if we don't have commitments from them?
MR. LANG: Absolutely. We have a clear national interest, as the President outlined today, in the development of Africa and increasing our trade and investment and economic relations generally with the Sub-Saharan region of Africa. So we will go ahead, but we think that it would be advisable for our other trading partners to move ahead autonomously in whatever way they think is appropriate.
Q Do you have any data in connection with the -- opportunity available in countries like Ghana, Gabon and Nigeria in the area of telecommunication, solar energy and --
MR. LANG: Specific to those sectors and countries I think we can come up with some information. But --
MR. TARULLO: Are you asking about specific opportunities or what the trade and investment flows are right now in those sectors?
MR. TARULLO: All of the above? We haven't done a country-sectoral analysis. What we have done is identified some of the areas where, for example, investment would be most helpful. Larry's trip to Africa was part of that process. So, too, in the process that USTR has run, paying attention to the kinds of products for which there may be production and export from Africa. So we've looked at it kind of in the aggregate, but we haven't broken it down in country by country, sector by sector.
MR. LANG: I don't think we can manage the economics of trade that way. I will say -- you mentioned basic telecommunications, and in that regard, a number of countries could undertake commitments in the basic telecommunications services sector where the agreement is open for additional obligations from -- beyond the 70 countries that are already obligated as of February 15th. And that would make these countries very attractive investment opportunities for American and other large telecommunications services companies. So in that sector, there is both a market and a trade opportunity if the countries make the necessary WTO commitments.
THE PRESS: Thank you.
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