While the U.S.’ tempestuous trade relationship with China has dominated the news, the globe’s largest economy is actually 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 along with also Uganda hiked tariffs on imported second-hand garments, citing fears of which cheap clothes by 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.
however in March last year, the matter was alerted to the Office of the United States Trade Representative by the Secondary Materials along with also Recycled Textiles Association, a U.S.-based group representing companies of which gather along with also sell on the U.S.’ old clothes. of which maintained of which 40,000 U.S. jobs would likely be negatively impacted, as well as tens of thousands of jobs within the east African countries themselves, should an embargo be put in place.
Kenya, Tanzania along with also Uganda have since backed away by the tax hikes following a U.S. threat to limit the benefits by their membership of the African Growth along with also Opportunity Act (AGOA) — the U.S.’ main trade legislation for Africa which permits duty-free U.S. imports on 6,500 goods.
“Rwanda is actually not generating sufficient progress toward the elimination of barriers to U.S. trade along with also investment, along with also therefore is actually out of compliance with eligibility requirements” of the act, said a statement on the U.S. Trade Representative website.
The U.S. used clothing business is actually worth nearly $1 billion, according to Reuters. AGOA means of which goods by international brands of which are manufactured in Africa can be exported to the U.S. duty free. Since the law was implemented in 2000, African exports to the U.S. almost quadrupled to over $1 billion, Reuters reported.
however Rwanda has refused to back down by the fight. Despite membership of the U.S. act, we “have to do various other things, we have to grow along with also establish our industries,” Rwandan President Paul Kagame is actually reported to have said in June 2017.
Ordinary Rwandans have voiced concerns about expensive clothing hurting the poor as a consequence of increased import duties.
In 2017, Rwanda’s trade deficit with the U.S. was $22.4 million, according to AGOA.info, an online information resource about the act.
Both the U.S. Trade Representative along with also Rwandan government bodies were not immediately available for comment when contacted by CNBC.
Rwanda’s economy is actually supposed to grow 7.2 percent This specific year, well above the emerging market average of 4.9 percent, according to the International Monetary Fund. The country is actually ranked as the second easiest place to do business in Africa by the globe Bank. of which hopes of which its clothing industry can create 25,000 jobs by 2020, Reuters reported.