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by Ismail Akwei, at 11:15 am, March 30, 2018, Money Moves

Defiant Rwanda faces U.S. trade sanctions over ban on used clothes imports

Donald Trump to cut Rwanda's trade benefits in 60 days over ban on used clothes imports --Photo: Rwandan President Paul Kagame and U.S. President Donald Trump

Rwanda faces suspension of its African Growth and Opportunity Act (AGOA) benefits by the United States over its decision to ban the importation of used clothes, while Tanzania and Uganda have succumbed to the threats issued in the past two years.

U.S. President Donald Trump has notified Congress of the suspension of duty-free treatment for all AGOA-eligible apparel products from Rwanda in 60 days, says the Deputy U.S. Trade Representative C.J. Mahoney in a statement issued this week.

“The President believes suspension of these benefits, instead of termination of Rwanda’s status as an AGOA beneficiary, would allow for continued engagement with the aim of restoring market access and thereby bringing Rwanda into compliance with the AGOA eligibility requirements,” said the statement.

“The President is not suspending benefits for Tanzania and Uganda because each has taken steps toward eliminating prohibitive tariff rates on imports of used clothing and footwear and committed not to phase in a ban of these products,” it added.

READ ALSO: U.S. issues ultimatum to three African countries to reverse ban on used clothes imports

Mahoney commended Tanzania and Uganda for reversing the ban and added that the U.S. will continue to monitor whether they “implement these commitments and demonstrate compliance with all of AGOA’s eligibility requirements.”

“I commend Tanzania and Uganda for taking corrective steps to address the United States’ concerns. We have and will continue to work with Rwanda to resolve this situation … The President’s determinations underscore his commitment to enforcing our trade laws and ensuring fairness in our trade relationships,” he said.

In February, the head of economic and regional affairs at the Africa Bureau of the US State Department issued the three countries a one-week ultimatum to reverse the ban or face trade sanctions.

The six-nation (East African Community) EAC comprising of Kenya, Uganda, Rwanda, Burundi, Tanzania and South Sudan decided to fully ban imported second-hand clothes and shoes by 2019, arguing that it would help member countries boost domestic clothes manufacturing.

As signatories to the AGOA trade programme which offers them duty-free access to the United States, their decision violated the programme’s conditions which includes the eliminating barriers to U.S. trade and investment, among others.

The United States was petitioned by the Secondary Materials and Recycled Textiles Association (SMART) which complained that the ban “imposed significant hardship” on the U.S. used-clothing industry and violated AGOA rules.

Kenya withdrew its decision to ban used clothes imports after earlier threats by the United States to review trade benefits which Kenya was a major beneficiary. The other countries did not budge.

Rwandan President Paul Kagame had stated that his country will proceed with the ban on used clothes imports and will choose to grow its local textile industry at the expense of being a member of the AGOA.

Uganda and Rwanda had raised taxes for used clothes and offered incentives to manufacturers to invest in their local textile industry.

U.S. imports from Rwanda, Tanzania, and Uganda totalled $43 million in 2016, up from $33 million in 2015 while exports were $281 million in 2016, up from $257 million in 2015.

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