EAC states oppose ejection from Agoa over used-clothes ban

Friday July 14 2017

Customers at a secondhand clothes market in Kenya. PHOTO | FILE

Customers at a secondhand clothes market in Kenya. PHOTO | FILE 

By KEVIN J KELLEY
More by this Author

Rwanda, Tanzania and Uganda say their stance to phase-out used clothes imports should not result in their ejection from the US preferential trade programme.

Senior officials from the three East African Community (EAC) countries, in Washington Thursday, opposed the move by a US trade lobby to restrict their eligibility status for the African Growth and Opportunity Act (Agoa).

The Secondary Materials and Recycled Textiles Association (Smart) filed a petition with US trade authorities in March urging that the three countries, along with EAC member Kenya, be deemed ineligible for Agoa's allowance of duty-free textile and apparel exports to the US market.

Lawrence Bogard, Smart's lawyer, said during Thursday's US government inquiry that the association's member companies would suffer major losses in jobs and revenues if the EAC ban on used-clothing imports is fully implemented.

Partial loss

Mr Bogard also argued that Kenya should be included among the EAC countries facing partial loss of their Agoa benefits.

Top US trade agency had announced last month that Kenya would be spared review of its Agoa eligibility.

The decision was said to be based on “recent actions Kenya has taken, including reversing tariff increases, effective July 1, 2017, and committing not to ban imports of used clothing through policy measures that are more trade-restrictive than necessary to protect human health.”

But the Smart lawyer argued that Kenya ought to be included in the Agoa eligibility review until Nairobi clarifies its commitments.

Smart specifically seeks confirmation that Kenya's reported imposition of minimum tariffs on containers of used goods “will not be implemented in a manner that negates the July 1 roll-back of Kenya's tariff increases,” Mr Bogard said.

Kenya would have far more to lose from suspension of its duty-free textile export privileges under Agoa than would any of the other EAC countries.

Kenya sold $394 million worth of textiles and clothing on the US market last year, compared to the total $43 million sum of Agoa trade for Rwanda, Tanzania and Uganda. The Kenyan embassy in Washington says that 66,000 jobs in Kenya are linked to Agoa's textile-export provisions.

'America First'

The opposing parties presented their comments to a panel of representatives of six US government agencies: the departments of Commerce, Labour, Treasury and State, as well as the US Agency for International Development and the Office of the US Trade Representative. Kenya was not represented at the hearing.

Looming over the three-hour session was the Trump administration's “America First” policy. The US president has vowed to oppose any trade initiative that he deems injurious to American interests.

Constance Hamilton of the US Trade Representative's office and other government officials challenged the East Africans' insistence that the agreed-upon three-year phase-out of used clothing imports did not amount to a 'ban'.

Ms Hamilton also pointedly asked how Rwanda's increase of tariffs from $0.20 to $2.50 per kilo could be seen as consistent with the rules of the World Trade Organisation. A Rwandan representative replied that the increase would be in effect for only one year.

A member of the Ugandan delegation at the hearing also insisted that Tanzania's and Uganda's doubling of levies on used-clothing imports — from $0.20 to $0.40 per kilogramme — was not a “tariff increase” but rather a “realignment.”

Failed consultations

Washington-based trade consultant Stephen Lande asserted that the hearing should not have been convened at all.

Mr Lande told the panel that the US Congress intended that such official inquiries should be held only when “all other possibilities have been exhausted.”

Ms Hamilton however responded that prior consultations had failed to resolve the issue at hand. Adding that “Smart has the right” to petition for punitive action against countries alleged to be violating Agoa rules.

The EAC countries also disputed Smart's contention that the used-clothing action violates two of Agoa's eligibility criteria.

The 17-year-old programme requires participant countries to have achieved “elimination of barriers to US trade” or be making progress in that direction.

The EAC member states adopted the used-clothing import phase-out as a means of encouraging development of their own textile manufacturing sectors, said Uganda Trade Minister Amelia Kayambadde, who spoke in her capacity as chair of the EAC's Council of Ministers.

“Industrialisation is a strategic pillar of EAC integration,” Ms Kayambadde said. “The heads of state decided that textiles and footwear manufacturing is a priority.”

Growth of textile and leather sectors will likely create many more jobs in East Africa than will be lost through the shutdown of local businesses involved in the used-clothing trade, the EAC representatives argued.

A Ugandan official said “Kenya has found a big, big appetite for new clothing and goods produced within the region.” Ms Kayambadde concurred that throughout the EAC “the demand is now for new clothing.” East Africans, “want a new life. People are able to afford to buy new things.” she said.

Loss of Agoa textile-export benefits would harm not only the EAC countries themselves but also US clothing manufacturers operating in East Africa, said Jeremy Lott, president of San Mar Corporation.