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Erin Collinson is director of Policy Outreach at CGD. Prior to joining the CGD staff, she spent over five years working in the US Senate. Originally from the Chicago area, Collinson holds a Master of Development Practice degree from the University of Minnesota and a BA in Environmental Policy from Denison University.
This Tuesday, the House and Ways Subcommittee on Trade will hold a hearing on the future of the African Growth and Opportunity Act (AGOA). CGD’s Ben Leo, senior fellow and director of the Rethinking US Development Policy Initiative, will testify.
AGOA, which extends trade preferences to eligible countries in sub-Saharan Africa and authorizes targeted capacity building, is set to expire in September 2015. With countless calls for a “seamless renewal,” and added pressure to demonstrate progress ahead of the upcoming US-Africa Leaders Summit, the Subcommittee is doing its part to get the ball rolling. (The Senate Finance Committee will do the same on Wednesday.) Since its inception, there has been strong bipartisan support for AGOA, but as we approach year 15, even the law’s strongest champions are looking to make improvements that will increase its impact.
I will be listening for Ben’s insights into lessons learned from the past 14 years of AGOA: what have been the success stories and how can a new bill go further? I look forward to hearing Ben’s ideas for revisions that will help address constraints that prevent African firms from taking advantage of trade preferences. I’m also hoping that Ben will touch on what United States can do to spur greater investment in sub-Saharan Africa, since the original AGOA act was billed as central to US-Africa trade and investment policy, and foreign investment will be critical to building and expanding industry on the continent.
Both House and Senate Appropriations Committees have approved bills to fund the State Department and foreign assistance in FY15. Thanks to the bipartisan budget deal reached back in December, the committees agreed to similar topline spending levels. (There's not the $10 billion gulf between the chambers we saw last year.) But this wouldn’t be Congress if there weren’t still notable differences between the bills and plenty of deviations from the President’s budget request.
Here are some questions we here at CGD have been asking and will be tracking as the appropriations process moves ahead.
What’s the deal with OCO?
Up against a spending cap and facing disagreement over projected revenue, appropriators had to make plenty of tough allocation decisions this year. On the Senate side, the committee employed an interesting work around, shifting a larger portion of the foreign affairs budget from “base” spending to Overseas Contingency Operations (OCO). OCO funding is set aside for costs incurred in frontline-states (to date, primarily Afghanistan, Iraq, Pakistan) and has the advantage of being “off-budget.” In other words, it doesn’t count against the agreed-upon spending caps. Senate Republicans accused the Committee chair of budget gimmickry, while advocates voiced concern about potential long-term implications for the budget baseline. In any case, this could make for a challenging reconciliation process.
Here’s the breakdown:
(dollars in billions)
*Late last week, the President sent a budget amendment to Congress requesting additional money for the continued US presence in Afghanistan. Included in this supplement is another $1.4 billion for State and international programs OCO activities, bumping the OCO request for FY15 to $7.3125.
(For a more comprehensive look at the foreign affairs budget, check out USGLC’s helpful spreadsheet and analysis.)
Where’s the love for Power Africa?
The President’s FY15 budget request included increased funding for agencies with key roles in his Power Africa initiative, including the Overseas Private Investment Corporation (OPIC), Export-Import Bank, US Trade and Development Authority (USTDA), and the Millennium Challenge Corporation (MCC). Congress has demonstrated that promoting expanded energy access in Africa is a bipartisan issue with wide support, so it was a bit surprising to see that funding for all of these agencies fell short of the President’s request. (The decision to short Ex-Im is less remarkable when you consider the fight brewing in Congress over the Bank’s future.) In addition, absent from both bills is authorizing language for OPIC, which has been carried in appropriations measures for the last several years. Hopefully we can simply take that as a sign that appropriators are rooting for passage of the House’s Electrify Africa Act or Senate’s Energize Africa Act, each of which include a multi-year reauthorization of the agency.
Who cares about the IMF?
Despite the administration’s urging, Congress has yet to authorize US participation in an IMF quota reform package agreed to back in 2010. The reforms can’t go into effect without sign-off from Congress, so the stalemate is a blow to US leadership in the institution. A possible window for moving the reform opened earlier this year, when Congress considered legislation aimed at helping the Ukraine, but closed amid hardened opposition in the House. The Senate bill delivers on the President’s request for IMF reform, while the House leaves it out. (Here’s why you should care.) Now the real question is whether the reform will garner sufficient support to land in a final appropriations measure.
Will the MCC’s budget get back to $1 billion?
President Obama’s budget request included $1 billion for the Millennium Challenge Corporation, the largest ask for the agency since FY12. There was good buzz around CGD about the President’s request for the agency, particularly given MCC’s key role in Power Africa and exploration of outcome-based approaches to assistance. So far, both chambers have come up short. The House bill allocates only $898.2 million for the agency and the Senate bill recommends $901 million in funding. Both Committee reports suggest ongoing congressional interest and concern about corruption. Fighting corruption is a top priority for the MCC and an area where the agency is striving to improve and measure better. Language in the House report also directs the agency to update an earlier report on second compacts. (Read about why second compacts are likely to be an important part of the agency’s future here.)
Which provisions on energy access will survive?
The FY14 Omnibus Appropriations bill presented a less than coherent message when it came to US policy on promoting energy access in developing countries. A late addition to the bill lifted restrictions on financing for coal plants abroad, while another provision required the United States to vote against international financial institution-funded large hydroelectric projects. It looks like we could get a showdown on these issues this year. The House bill includes language lifting potential coal restrictions, while the Senate version seeks to reaffirm a greenhouse gas emissions cap imposed on OPIC. The FY15 Senate bill also requires IFI-funded hydroelectric projects to meet conditions relating to sustainability, risk, public acceptance, transparency, management, and monitoring in order to gain US support.
How will food aid reform fare?
Both House and Senate Agriculture Appropriations bills (food aid comes out of the foreign affairs budget, but it’s a different subcommittee making the decisions) provide $1.466 billion for the largest US food aid program – the same level of funding provided in FY14 and a bit higher than the amount requested by the President. But on the reform front, the news is disappointing. The Senate bill includes $35 million in funding that would help organizations reduce the need to monetize food aid, thanks to an amendment sponsored by Senators Johanns (R-NE) and Leahy (D-VT), but does not include funding for the local and regional purchase (LRP) program. The 2014 Farm bill reauthorized LRP, which offers the flexibility to procure food assistance near where it is needed most, at $80 million. The House adopted an amendment, offered by Foreign Affairs Committee Chair Ed Royce (R-CA), to fund LRP at a very modest (but better than nothing) $10 million.
Whatever happened to the Opportunity, Growth, and Security Initiative?
You might remember that President Obama’s FY15 budget request arrived with a proposal for $56 billion in new spending called the Opportunity, Growth, and Security Initiative, to be offset by implementing spending reforms and closing tax loopholes. While fully half of the initiative was devoted to defense programs, a few foreign assistance items made the cut. This included a proposed:
We were pessimistic from the beginning about the prospects for the $56 billion wish list, which media outlets portrayed as dead on arrival. And, unsurprisingly, this addendum to the President’s budget seems to have been roundly ignored by both chambers.
When (if ever) will these bills see floor action?
Congress is in recess this week, but once the parades and firework displays are over, they’ll get back to the job of trying to advance spending bills before the end of the fiscal year. To date, the House has voted to pass five of twelve appropriations bills. But a recent effort to move three bills (among the least controversial of the bunch) as a package deal in the Senate stalled over disagreement on amendments. Partisan tension is running high with the upcoming midterm elections and the appropriations process offers opportunities for members to send messages to key constituent groups. We will have to wait and see, but I’d place the odds of moving all twelve bills (even all at once) by September 30 at slim to none. It’s more likely that we’ll end up with a stopgap measure, setting up Congress to finish the job post-election.
Late last week, the House of Representatives passed the Electrify Africa Act (H.R. 2548), a bill aimed at improving access to reliable, affordable energy across sub-Saharan Africa. Here’s a summary of the bill and here’s why it matters:
With so much attention focused on partisan vitriol, we should celebrate cross-party consensus – and in an election year, no less! Look no further than the bill’s sponsors, House Foreign Affairs Committee Chairman Ed Royce (R-CA) and Ranking Member Eliot Engel (D-NY), along with their dedicated staffs for setting an important example, shepherding the bill through committee, and marshaling support from colleagues on both sides of the aisle. The Electrify Africa Act also enjoyed support from a diverse coalition of outside allies, including the ONE Campaign and the National Rural Electric Cooperative Association. And as Ben Leo pointed out, the bill benefited from analysis by the Congressional Budget Office, which calculated its provisions would actually save $86 million over five years.
2) Congressional support helps beyond 2016.
Endurance and sustainability are always questions for Administration-driven initiatives. President Obama announced Power Africa last June, but will the initiative last beyond 2016? The winning formula for lasting impact seems to be both Presidential and Congressional backing, accompanied by authorizing legislation (see PEPFAR and MCC).
3) A first step toward development tools of the future.
Included in the Electrify Africa Act is a three-year reauthorization of the Overseas Private Investment Corporation (OPIC), the US development finance institution. As developing country economies grow and expand, the United States will need to turn to instruments beyond traditional foreign assistance to promote investment and engage the private sector. My colleagues at CGD have called on Congress to strengthen OPIC, unleashing the agency’s potential to mobilize private capital and spur economic growth.
Can the Senate act in time?
All eyes now turn to the Senate, where we expect similar, bipartisan legislation to be introduced soon. The timing will be tight. Congress’ traditional August recess is fast approaching and both chambers will be working to move FY 2015 spending bills ahead of a fall break that coincides with midterm elections.
2013 wasn’t exactly a bang-up year for US development policy. Then again, it wasn’t exactly a bang-up year for anything involving politics. But keep those party hats and your sparkling beverage of choice out!
Here’s our personal list of some of the best ideas to come out of CGD for what the United States could do to make its development policy truly toast-worthy in 2014 (with the caveat that some are more politically feasible than others).
Don’t Limit US Development Policy to a 70’s-style Model: Unleash OPIC.
The USG is still letting traditional aid lead its development efforts, while the Overseas Private Investment Corporation (OPIC), the US development finance institution (like the World Bank’s IFC), is hamstrung by a Nixon-era authorization. With a few budget-neutral tweaks, like letting the agency retain a small percentage of its profits to increase staff and granting it equity authority, OPIC could lead the world in the 21st century era of leveraging private investment for development. OPIC could draw more US investment into developing countries, all while returning greater profits to the US Treasury. It’s a win for development, for US businesses, and for US taxpayers, too.
Pay for Development Outcomes: Pilot COD Aid at USAID and MCC.
Leveraging private money with OPIC-style development finance might be the wave of the near future, but that doesn’t mean that the United States shouldn’t be making traditional aid more effective. Rather than paying for inputs, US aid agencies should shift aid resources to paying for development outcomes by piloting Cash on Delivery Aid. US taxpayers would know their dollars are going to development programs that work, while the approach would also strengthen partner country capacity, innovation, and governance. The Education and energy sectors are ripe for pilots. USAID and MCC should race to see who can be first with a pilot, then share notes on what they learn.
Modernize the Delivery of US Food Aid.
The US system designed to deliver food aid to hungry people abroad is devastatingly inefficient. Regulations that mandate in-kind donations of surplus US commodities and require that food supplies be transported aboard US-flagged vessels make this much-needed assistance unnecessarily slow and costly. Efforts to reform this antiquated system made headlines on several occasions in 2013: a proposal in the President’s Budget, a tight vote on the House floor, delivery challenges in Syria and the typhoon-ravaged Philippines, and a parody video on The Daily Show. Fingers crossed that the growing momentum for reform will propel real change in the year ahead.
Get Strategic about Bilateral versus Multilateral Allocations.
Build Power Africa into the Bipartisan Development Legacy it Deserves to Be.
We were among several of our CGD colleagues cheering on the President’s Power Africa initiative. The President deserves serious props for identifying reliable electricity access as a key to economic growth in sub-Saharan Africa. Now the Administration should work with Congress to pass a strong Electrify Africa bill to make this a bipartisan initiative that lasts beyond President Obama’s second term, much like President Bush did with PEPFAR and the MCC. Truly powering Africa will also mean being realistic about how much electricity is needed; unleashing OPIC; implementing new projects, not just existing ones; leveraging the MDBs; and seeking to expand the initiative beyond the initial countries.
Pass Immigration Reform that Recognizes the Link Between Migration and Development.
While the prospects of Congress passing meaningful immigration reform legislation in 2014 remain murky at best, we’re still hoping for US immigration policy that recognizes the link between migration and development. Even small adjustments to existing policies could take advantage of this under-realized connection. US programs that extend temporary work visas, for example, allow workers from developing countries to fill labor shortages faced by US employers and add value to the US economy, while offering guest workers a chance to increase their earning potential dramatically. Such programs yield tangible benefits to sending countries since workers frequently use higher earnings to support family back home. Globally, remittances from workers abroad actually exceed foreign aid, but this is not the case in some of the poorest and least developed countries. Designing and implementing programs that help workers from these countries seize the opportunity afforded by temporary employment visas could have dramatic development impacts.
What else do others at CGD hope to see in 2014 from US development policy?
Many of our colleagues also hope to see a final rulemaking from the Securities and Exchange Commission (SEC) on Section 1504 (Cardin-Lugar) of Dodd-Frank, the provision that instructs the SEC to issue rules to require resource extraction issuers to publicly disclose payments made to governments for "the purpose of the commercial development of oil, natural gas, or minerals.” Cheers to Oxfam, Publish What you Fund, and Senators Cardin, Leahy, Levin, Markey, and former Senator Lugar for continuing to push for a new rulemaking following a district court’s vacating of the 2012 rule.
Stay tuned to CGD for new toast-worthy development policy ideas in 2014!
Like many, we at CGD are using the start of 2014 to remember highlights of the past year and compile a wish list for the year to come. Here’s our best guess of what’s going to be hot and not in global development (and beyond) in 2014. Got a better dyad? Share it in the comments section below.
President Obama’s 2015 State of the Union address had a decidedly domestic focus, but a few key development issues made the cut (if not explicitly framed as such). While I wish I’d heard more, to follow our catalog of what we hoped would be included in the president’s remarks, here’s a quick recap of what we did hear:
On fighting Ebola and extreme poverty
“In West Africa, our troops, our scientists, our doctors, our nurses and healthcare workers are rolling back Ebola — saving countless lives and stopping the spread of disease. I couldn’t be prouder of them, and I thank this Congress for your bipartisan support of their efforts. But the job is not yet done — and the world needs to use this lesson to build a more effective global effort to prevent the spread of future pandemics, invest in smart development, and eradicate extreme poverty.”
According to estimates from the WHO and CDC, the Ebola outbreak in West Africa has claimed more than 8,600 lives in Guinea, Liberia, and Sierra Leone, the three countries grappling with the most widespread transmission. Considerable progress has been made, but the president was right to stress the need for more work ahead. In addition to fighting the disease itself, the United States will need to find ways to assist Guinea, Liberia, and Sierra Leone in recovering from this devastating outbreak. Full economic recovery will demand a multifaceted approach with strategies targeted at health systems, households, and firms.
For the third year running President Obama used the SOTU to call for the eradication of extreme poverty (measured at $1.25 a day or less). While ending extreme poverty remains a somewhatcontroversial target, reaffirming this US commitment at the presidential level was an important signal ahead of this fall’s UN Summit that will launch a new sustainable development agenda.
On climate change
“And no challenge — no challenge — poses a greater threat to future generations than climate change.… The best scientists in the world are all telling us that our activities are changing the climate, and if we do not act forcefully, we’ll continue to see rising oceans, longer, hotter heat waves, dangerous droughts and floods, and massive disruptions that can trigger greater migration, conflict, and hunger around the globe. The Pentagon says that climate change poses immediate risks to our national security. We should act like it.”
President Obama didn’t mince words when it came to addressing the urgent challenge of climate change. In addition to highlighting its dangerous consequences, he used the US-China joint announcement on climate change to illustrate the importance of immediate action and international cooperation. His parting words on the subject projected optimism for reaching a global agreement at the COP in Paris this December. And the Paris climate meeting provides an important opportunity for advancing cooperation on performance-based finance to reduce deforestation.
“21st century businesses, including small businesses, need to sell more American products overseas. Today, our businesses export more than ever, and exporters tend to pay their workers higher wages.… We should write those rules. We should level the playing field. That’s why I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair.”
President Obama asked Congress for trade promotion authority, which would enable his administration to negotiate key trade agreements and have bills subjected to a simple up or down vote. He also spoke about the economic benefits of trade for Americans. But his remarks referenced only the proposed Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership deals, the potential effects of which remain murky for many of the world’s poorest countries.
“Yes, passions still fly on immigration, but surely we can all see something of ourselves in the striving young student, and agree that no one benefits when a hardworking mom is taken from her child, and that it’s possible to shape a law that upholds our tradition as a nation of laws and a nation of immigrants.”
There wasn’t any doubt President Obama would face a tough audience when it came to the subject of immigration. With many Republicans clamoring to reverse the president’s executive action deferring deportations, there was little point in calling for broad reform. Instead President Obama acknowledged the role of immigrants in the fabric of America, and left it at that, but he could have highlighted the economic benefits of labor mobility or perhaps even floated the idea of win-win partnerships to address critical skill shortages.
On international engagement
“Of course, if there’s one thing this new century has taught us, it’s that we cannot separate our work at home from challenges beyond our shores.”
Let’s hope President Obama keeps this lesson in mind for the remainder of his term, particularly as he looks to cement his development legacy. On that, I’m hopeful that we’ll hear much more about his remaining priorities, especially at the major UN summit this fall.
CGD experts have penned memos on proposals to improve US development policy that we hope the next president will prioritize once in office. These are bipartisan ideas that could make a big difference for people in the developing world. The proposals come from our teams working on the US Development Policy Initiative, Global Health, and Gender.
President Trump and many congressional Republicans have made no secret of their strong interest in dismantling “Dodd-Frank,” a law signed in the wake of the 2008 financial crisis to strengthen regulation of the financial industry in the United States. But it’s a small, seemingly peripheral, transparency provision focused on developing countries that’s poised to be one of the law’s earliest casualties. Congress quietly voted last week to torpedo implementation of a rule that would require U.S. firms to disclose payments made to foreign governments for the commercial development of oil, natural gas, or minerals.
Section 1504 of the Dodd-Frank Act aimed to increase the transparency of extractive industry operations in foreign countries to empower citizens to hold their governments accountable and ensure natural resource revenues are spent wisely. This aim made the provision a priority for transparency advocates, but it also attracted the attention and support of development experts. CGD scholars followed the (mis)fortunes of Dodd-Frank Section 1504 along the way, occasionally chronicling its progress toward implementation.
But more telling than the sporadic blog post is that on not one, but two occasions, CGD bestowed its then-annual “Commitment to Development ‘Ideas in Action’ Award” to champions of the provision. In 2010, CGD honored Publish What You Pay, highlighting the civil society coalition’s work on section 1504. And then, in 2012, CGD gave the award to Senator Dick Lugar (R-IN)—praising a decades-long commitment to international development, including sponsorship of Section 1504—also known as the Cardin-Lugar Transparency Provision. In celebrating the provision, CGD recognized its potential to yield outsize impact as a “beyond aid” approach to development.
How did Section 1504 fall so quickly in these early days of the Trump Administration? The provision always faced strong opposition from US industry interests, and litigation plagued the rulemaking process and delayed implementation of the provision from the start. It wasn’t until June of last year that the Securities and Exchange Commission (SEC) published a revised final rule—mandated disclosures were slated to begin with fiscal year 2018. Unfortunately the late promulgation date left the rule vulnerable to reversal using the Congressional Review Act (CRA)—and that’s just what happened. (The rarely used CRA gives Congress the ability to abolish major rules finalized within a specified time period.)
At the moment, the ultimate fate of Section 1504 remains something of a mystery. Despite the fact that the transparency provision is still on the books, under the CRA, the SEC cannot promulgate a disclosure rule “substantially the same” as what Congress voted to repeal in the absence of new legislation. We’ll keep watch—and hope the bipartisan support for transparency and development we’ve seen from Congress in recent years propels action to salvage this award-winning provision.
US policies on immigration, trade, climate change, foreign assistance, and more affect the poor and vulnerable throughout the world. The Center for Global Development strives to make its research in these areas relevant and practical for US policymakers.
In outlining his vision for U.S. development assistance, US Agency for International Development (USAID) Administrator Mark Green has emphasized fidelity to an overarching purpose—ending its need to exist. Consistent with this objective, USAID has been developing a new strategic approach that seeks to more systematically orient its programming toward building countries’ capacity to plan, finance, and manage their own development. A key component of this “journey to self-reliance” framework is a set of metrics that will help assess each country’s progress along their journey. The metrics will help inform strategic planning around the nature of USAID’s partnership with the country, shape development dialogue, and help inform thinking about strategic transitions.