US and Rwanda trade dispute over second-hand clothes

The Washington Post via Getty Images

Shoppers at Nyamirambo Market in the Rwandan capital of Kigali sift through piles of used clothing on May 10, 2018.

While the U.S.’ tempestuous trade relationship with China has dominated the news, the world’s largest economy is also harboring a disagreement with the landlocked African country of Rwanda over an unusual commodity — second-hand clothes.

The U.S.’ 60-day notice period for Rwanda to reduce its tariff on imported used clothing — or face the consequences — expired on Monday. Details on what will happen next to an industry which creates tens of thousands of jobs in both countries are hazy.

In July 2016, the east African countries of Rwanda, Kenya, Tanzania and Uganda hiked tariffs on imported second-hand garments, citing fears that cheap clothes from abroad were threatening their domestic manufacturing industries. Rwanda reportedly increased duties by 20 cents to $2.50 per kilogram.

Discussion among the east African countries of banning imports completely by 2019 has been on the cards as far back as 2015.

But in March last year, the matter was alerted to the Office of the United States Trade Representative by the Secondary Materials and Recycled Textiles Association, a U.S.-based group representing companies that gather and sell on the U.S.’ old clothes. It maintained that 40,000 U.S. jobs would be negatively impacted, as well as tens of thousands of jobs in the east African countries themselves, should an embargo be put in place.

Kenya, Tanzania and Uganda have since backed away from the tax hikes following a U.S. threat to limit the benefits from their membership of the African Growth and Opportunity Act (AGOA) — the U.S.’ main trade legislation for Africa which permits duty-free U.S. imports on 6,500 goods.

“Rwanda is not making sufficient progress toward the elimination of barriers to U.S. trade and investment, and therefore is out of compliance with eligibility requirements” of the act, said a statement on the U.S. Trade Representative website.

Be the first to comment

Leave a Reply