Rwanda, Tanzania and Uganda have been under review for their preferential trade eligibility as part of the African Growth & Opportunity Act (AGOA) since they decided to ban imports of used clothing and footwear, and that review has yielded a benefits suspension for Rwanda.
The U.S. Trade Representative’s office found the ban harms the U.S. used clothing industry and was inconsistent with AGOA beneficiary requirement to eliminate barriers to U.S. trade and investment. The East African countries had attempted to impose the used clothing ban to protect local industry and because wearing hand-me-downs compromises the dignity of its people.
Tanzania and Uganda are not having their benefits suspended because each has taken steps toward eliminating prohibitive tariff rates on imports of used clothing and footwear and have committed not to phase in a ban of these products. The U.S. will continue to monitor whether Tanzania and Uganda implement these commitments and demonstrate compliance with all of AGOA’s eligibility requirements.
Based on the results of the review, USTR and the White House determined that Rwanda is not making sufficient progress toward the elimination of barriers to U.S. trade and investment and is therefore out of compliance with eligibility requirements for AGOA. President Trump notified Congress and the government of Rwanda of his intent to suspend duty-free treatment for all AGOA-eligible apparel products from Rwanda in 60 days.
“The president’s determinations underscore his commitment to enforcing our trade laws and ensuring fairness in our trade relationships,” Deputy USTR C.J. Mahoney said. “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.”
USTR said the president believes suspension of these benefits, instead of termination of Rwanda’s status as an AGOA beneficiary, which allows for duty-free imports to the U.S. on a range of products, including apparel, would allow for continued engagement with the aim of restoring market access and thereby bringing Rwanda into compliance with the AGOA eligibility requirements.
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The review came in response to a petition filed by the Secondary Materials and Recycled Textiles Association (SMART) in March 2017 that asserted the East African Community’s 2016 decision to phase in a ban on imports of used clothing and footwear imposed significant economic hardship on the U.S. used clothing industry and was inconsistent with AGOA stipulations that beneficiary countries establish a market-based economy and eliminate barriers to U.S. trade and investment.
In its petition, SMART estimated that 40,000 U.S. jobs related to the collection, processing and distribution of used clothing and footwear would be negatively affected once the ban was implemented.
During hearings held by USTR this fall, USAid’s East Africa Trade and Investment Hub concluded in a 30-page analysis it submitted that a ban on secondhand clothing imports was not needed to bolster domestic clothing manufacturing in Africa.
“EAC policy makers would be well advised to keep both used clothing sector and AGOA export benefits while focusing on domestic industry development, knowing these are not mutually exclusive goals,” the USAid study said.
USAid estimated that the used clothing industry accounts for 355,000 jobs in the EAC countries, which in turn generate $230 million in income that supports some 1.4 million East Africans.