US declares clothes wars

The words “trade war” conjure up images of nations battling over their great exports – steel, oil, minerals and precious metals – not castoff clothing.

Great exports are caught up in the fight US President Donald Trump is having with China and allies in the West through his “America First” policies.

But a bureaucratic tussle over old T-shirts, jeans and jackets that Americans donate by the ton for a tiny tax deduction are threatening a trade preference offered to African nations like Rwanda.

The potential fallout demonstrates how some African nations are still fighting to have an equal seat at the global trading table after spending decades as colonies, whose products benefited their masters and a small local elite.

In a perverse irony, the US threats stem from the fact that those countries want to do what the trade preference – granted by the African Growth and Opportunity Act, or Agoa – was designed to do: help build local manufacturing capacity.

Yet Trump’s administration has threatened four East African nations – Kenya, Uganda, Tanzania and Rwanda – for increasing the taxes they charge on second-hand clothing.

In Rwanda’s case, the government has increased its import tariffs to $2.50 (R33) per kilogram from $0.20, with the hope of increasing demand for local products that have been depressed by a flood of cheap second-hand clothing.

The US Trade Representative has suspended Rwanda’s Agoa privileges for 60 days after it refused to play ball.

Uganda and Tanzania have backed off and were spared punishment, and Kenya had already dropped the plan by the time the US Trade Representative issued the decision.

Agoa gives 40 African nations duty-free and quota-free access to the US market in exchange for eliminating barriers to access for US products in their markets.

Rwanda found itself in this fix after the Secondary Materials and Recycled Textiles Association, a US industry group representing companies that turn old textiles into rags, or who buy excess clothing on the cheap to sell elsewhere, complained about the ban and said it could cost 40 000 American jobs.

“Elsewhere,” of course, is places like Rwanda and Kenya, where second-hand clothing is the only affordable option for much of the population.

While there are no good figures for how much the second-hand clothing business is worth, the latest data shows that rich countries exported $1.9 billion in used clothing in 2009 and that 80% of Africans wear these items.

Rwanda’s position is simple – it must forego Agoa’s preferences for now if it ever hopes to build its own manufacturing capacity for clothing and textiles. The US meanwhile, is trying to resolve the issue. – ANA