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Rwanda suffers US trade war



In what appears to be an extension of trade war, President Donald Trump has hit Africa’s smallest country, Rwanda, suspending duty-free treatment for apparel products from the country.
 
The duty-free benefits for Rwanda were part of the African Growth and Opportunity Act (AGOA), a free trade agreement between the EAC and the US.
 
After Rwanda increased the import tariffs for used textiles, the American Secondary Materials and Recycled Textiles Association filed a petition lobbying an AGOA eligibility review, arguing the ban "imposed significant hardship” on the US used­ clothing industry.
 
Why does one of the most powerful states in the world care so much about used clothes in one of the smallest countries in Africa?
 
One reason is money: the second­-hand clothing trade is big business in East Africa.
 
Although many people in the West give their old garments as donations to charity organizations, the textiles are then being commercialized.
 
Charities and companies either sell the clothes in second­hand shops or export them.
 
 Second-hand clothes in Rwanda were cheap before 2016. Now that the import tariffs are more than ten times higher, the price of a used garments can be as much as for a new piece made in Rwanda.
 
Due to high production costs, locally manufactured textiles are too expensive for the majority of Rwandans. Therefore, a ban of second­-hand clothes could lead to a vacuum demand of affordable fashion.
 
This makes smuggling of used clothes very attractive.
 
But this vacuum could also be filled otherwise. "Some say the import ban will increase cheap textile imports from China," said Helmut Asche, professor of economy and African studies at the Johannes Gutenberg University Mainz in Germany.
 
That would just be a substitution for the second­hand clothes from the US.
 
"In the short run the deficit will be covered by new clothes from Asia”, Rodgers Mukwaya from the UN Economic Commission for Africa told DW in February.
 
"In the long term, however, we believe that we can take over part of this market ourselves."
 
Rwandan authorities have impounded 230 tons of illegally imported clothes from July to December 2017.
 
This is a consequence of the rise of tariffs for textiles from $0.20 (€0,17) to $2.50 (€2,09) per kilogram by the Rwandan government.
 
The high tariffs are part of the strategy to strengthen the domestic textile sector.
 
Currently, local production cannot compete with the quality and price of used clothes from the West. In 2015, the states of the East African Community (EAC) decided to ban the import on second-­hand clothing from 2019 onwards.
 
Today, Rwanda is the only state that sticks to this plan. It is the US that changed the other countries' minds and also tried to turn Rwanda's decision around.
 
After months of warnings, US President Donald Trump eventually suspended duty-free benefits for apparel from Rwanda on July 31st.
 
Second-hand clothes in Rwanda were cheap before 2016. Now that the import tariffs are more than ten times higher, the price of a used garments can be as much as for a new piece made in Rwanda.
 
Due to high production costs, locally manufactured textiles are too expensive for the majority of Rwandans. Therefore, a ban of second­-hand clothes could lead to a vacuum demand of affordable fashion.