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Donald Trump’s “America first” has particularly hit a small country in Africa: Rwanda.
The imposition of tariffs on imports of clothing from the African country by the United States led to a conflict that, so far, shows no signs of a truce.
The dispute includes the obscure import market for second-hand clothes and Rwanda’s refusal to give in to the world’s largest economy.
The story began in March of this year, when Washington notified Rwanda that in 60 days it would end the agreement that allows it to sell clothes to the United States free of tariffs .
It is a special status that the country has under the Growth and Opportunities for Africa Act (Agoa).
The act is the symbol of US laws that seek to improve trade and investment in certain African countries, through tax-free access to 6,500 products exported from Africa.
“The president’s decision emphasizes his commitment to comply with our commercial laws and to ensure that there is justice in our business relationships,” said Vice-President of Commerce CJ Mahoney at the time.
Those 60 days have already been fulfilled.
Why did Rwanda prohibit the importation of used clothing?
The idea of Rwanda forbidding the importation of used clothing is to protect its emerging textile industry.
Many African nations were once home to dynamic textile industries. But decades of mismanagement, instability and an increase in global competition have not passed in vain.
This situation can be seen in Ghana, where market liberalization in the 1980s led to a sharp loss of jobs in the textile sector, from 25,000 people in 1977 to 5,000 in 2000.
Kenya had half a million workers in the sector a couple of decades ago. Today there are only tens of thousands.
The import of used clothing from developed countries is one of the factors that have contributed to the crisis (on the verge of collapse) of the clothing industry in sub-Saharan Africa.
Garment prices are so cheap that local businesses can not compete.
According to a study by the United States Agency for International Development (USAID, for its acronym in English), in 2015 the East African Community (a customs union formed by Kenya, Uganda, Tanzania, Burundi, Rwanda and South Sudan) represented about 13% of global imports of second-hand clothes , worth US $ 274 million.
About 67% of the East African population bought at least part of their clothing in a used clothing market, according to the same report.
The East African countries argued that domestic demand for locally manufactured clothing was being suffocated by the importation of cheap second-hand garments.
Therefore, in 2015, the countries of the Eastern African Community (CAO) announced that the sale of second-hand clothes would be prohibited in their markets after 2019 .
In the case of Rwanda, the government said that the used garments threatened the dignity of its citizens.
That country increased its taxes on the import of used clothing from US $ 0.20 to US $ 2.50 per kilo in 2016 and its ultimate goal is to put an end to all imports of this type.
His government hopes to help with these measures to strengthen the local textile industry and create more than 25,000 jobs.
Why did this bother the United States?
Following these measures, the Association of Secondary Materials and Recycled Textiles (SMRTA) filed an appeal with the Office of the United States Trade Representative (USTR), assuring that the CAO’s decision would impose “significant economic hardships” on the US garment industry.
He estimated that this measure could cost the United States about 40,000 jobs and about US $ 124 million in exports.
Those figures caused alarm but were questioned by the CAO, according to the BBC Grant T Harris, who worked as an adviser to former President Barack Obama on issues related to Africa.
In March 2017, the USTR threatened to withdraw the benefits of l Agoa to four countries – Kenya, Uganda, Tanzania and Rwanda .
The threats had their effect.
In the middle of last year, Kenya announced that it was withdrawing from the agreement to ban the importation of used clothing.
The benefits that this country receives from Agoa are much higher than those received by Rwanda, since its exports to the United States totaled almost US $ 600 million in 2017, compared to US $ 43 million obtained by Rwanda.
Tanzania and Uganda also capitulated and, consequently, the USTR announced that “benefits would not be suspended” because they had taken steps to “eliminate prohibitive customs duties” on the importation of used clothingand footwear and had “committed to do not impose a ban “on these products.
How will this affect Rwanda?
Although the United States is not the main export market for Rwanda, these measures by Washington could harm the country, Florie Liser, a former US representative for Trade with Africa, told the BBC.
“I visited a production center where 150 women were making handbags for Kate Spade specifically to be exported without tariffs to the United States through the Agoa,” he said.
Those jobs could be in jeopardy and customs taxes could scare away investors seeking to take advantage of Agoa, he explained.
The president of Rwanda, Paul Kagame, seems willing to make the sacrifice. “This is the choice we have to make, as far as I am concerned, making this choice is simple, although we could suffer the consequences,” he said in 2017.
“Rwanda and other countries in the region that are part of the Agoa have to do other things, we have to grow and establish our industries,” he added.
According to experts, the real winner in this dispute will be China, whose exports of cheap clothes to East Africa amount to US $ 1.2 billion according to USAID.
That amount far exceeds the value of the imports of used garments that are currently acquired by the poorest 40% of the population of that area of Africa.
“This will only open up more markets and generate greater dependence on China,” said Harris, “who will use these second-hand clothes will not have the purchasing power to buy locally made garments, so they will choose to buy the cheap pieces exported from China.”