East African countries have backed down on their initial stand on banning the importation secondhand clothing. Instead they will use of tax measures and incentives to spur local manufacturing.
During the EAC Heads of State retreat on infrastructure and health financing in Kampala, the EAC presidents resolved to prioritise the development of a competitive domestic textile and leather sector to provide affordable clothes and leather products in the region.
“Partner states should now focus on boosting the EAC textile and footwear manufacturing in the region through measures that will not jeopardise the African Growth and Opportunity Act (Agoa) benefits,” said the presidents in a joint statement.
The heads of state further directed the Council of Ministers to put in place mechanisms that support textile and leather manufacturing in EAC, and report progress in the next Summit.
They also directed the Secretariat to request the US to give the bloc more time to finalise consultations to address Washington’s concerns on used clothes imports.
Kenya will continue applying an ad valorem rate of 35 per cent and specific rate of $ 0.2 per kg on imported secondhand clothing while Rwanda will continue to apply both ad valorem and specific rates of 35 per cent and 40 US cents respectively. Burundi will continue applying ad valorem rate of 35 per cent and specific rate of 40 US cents per kg.
The EAC countries had jointly proposed a specific rate of $0.4 per kilogramme from July 2015.
“The decisions basically show no harmonised regional position. Each country is being allowed to do what it deems to be interests,” said Peter Kiguta, a regional trade expert. He said the Customs Union Protocol was not being respected.
“As per the Customs Union, EAC countries are supposed to make joint decisions on matters of foreign trade. Of late it seems adherence to EAC decisions is based on selfish country interests,” Mr Kiguta added.
Agoa ban threat
The decision by the EAC to tone down on their 2016 stance to completely ban importation of secondhand clothing into the region follows a decision by the US in the Out-of-Cycle Review to temporarily suspend Uganda, Rwanda and Tanzania from duty-free access to US and Agoa for all eligible exports until they reverse the ban.
Kenya had requested the SCTIFI for a stay of application of the import tariff on used clothing to apply $0.20 per kg and, was therefore, not affected. Rwanda, Tanzania, and Uganda were granted until December to address US concerns on used clothing.
“Kenya wished to be coming with EAC tariff regime to avoid backlash from USA which had hinted at withdrawing Agoa market access preferences. The USA market is becoming more important for Kenya with introduction of direct flights from Nairobi. It would be foolhardy for Kenya to antagonise USA,” said Mr Kiguta.
On February 13, the US acting director for Economic and Regional Affairs Harry Sullivan, asked the heads of state for Rwanda, Tanzania and Uganda to reduce their tariffs to pre 2016 levels and commit not to phase out the imports of used clothes without justification.
“So rather than banning imported used clothing, we believe the most effective domestic growth strategy for the local fashion and apparel industry would be to build its brands and markets for the growing middle class,” said Mr Sullivan.
“In order to continue to receive benefits under the Agoa programme, countries must meet Agoa eligibility criteria, which include eliminating barriers to US trade and investment.