Trump suspends clothes exports to Rwanda

Second hand clothes

Donald Trump’s administration has suspended duty-free exports on clothes to Rwanda after the East African nation imposed tariffs on US imports of second-hand clothing and footwear which it blames for harming the local textile industry.

“The president’s action does not affect the vast majority of Rwanda’s exports to the US”, a statement by the office of the US trade representative read.

The clothes imports account for 3% of what Rwanda exports to the US under the African Growth and Opportunity Act (Agoa) and are valued at $1.5m (£1m).

Rwanda’s position had been widely adopted by East Africa’s states but Kenya, Tanzania and Uganda dropped their stance fearing retaliatory action that would lead to loss of access to US markets via Agoa.

Rwanda clothing imports have so far dropped by a third.

The trade dispute can be traced to 2016, when Rwanda increased import duties on used clothing from the United States from $0.25 to $2.50 per kilogram.

Used clothes, many of which start as US charity donations, have long been a staple of wardrobes in a country that still bears the scars of a horrific genocide 24 years ago. Yet their abundance and popularity have stalled development in the local clothing industry.

Rwandan President Paul Kagame has said the duties were needed to boost local producers and prevent his country from being used as a “dumping ground” for used American clothes. He has proposed banning imports by 2019.

The restrictions have upset traders in the United States.

The Secondary Materials and Recycled Textiles Association, which represents companies that sell used and recycled clothing, filed a complaint with the US government in 2017 arguing that the trade barriers put thousands of American jobs at risk.

The US warned Rwanda in March that it could lose the right to export duty-free apparel if it failed to roll back its tariffs.

Critics of the US decision say the government has overreacted to the tariffs on used clothing, which affect just $17 million in US exports a year and target a country where average annual income is around $700.

Rosa Whitaker, a former US trade official who worked on African issues under Presidents Bill Clinton and George W. Bush, told CNN that the Trump administration was threatening to suspend the trade benefit out of a “warped sense of America-first.”

“The Trump administration is making a symbolic statement rather than a substantive statement,” she said. “I see America picking trade battles, but I was surprised we would have time to pick one with Rwanda. We are talking about such a small amount of trade.”

Whitaker, who helped design AGOA, said the move goes against the original intent of the legislation.

“One of the whole points of the agreement was to help African countries to develop an apparel manufacturing base, because we understood that apparel is the first entry point into manufacturing,” she said.

In Rwanda, the government has pledged to help exporters affected by the trade spat by compensating them for new US taxes.

Source:BBC,CNN Money