Uganda Risks US Sanctions Over Second-Hand Clothes Ban

Photo: The Observer, The US says a ban on second-hand clothes by EAC nations affects their textile industry.
Uganda’s eligibility to trade with the United States under the African Growth and Opportunity Act (AGOA) is under review over her stance on the importation of second-hand clothing commonly known as ‘mivumba’.
The review is in response to a petition filed by the Secondary Materials and Recycled Textiles Association (SMART), an association of textile companies from the United States.
SMART argues that the decision by the East African Community (EAC) to ban imports of used clothing and footwear is imposing significant economic hardship on the United States’ used clothing industry.
The petitioners argue that the ban directly contradicts requirements that African Growth and Opportunity Act (AGOA) beneficiaries work towards eliminating ‘barriers to United States trade and investment’ and promote ‘economic policies to reduce poverty’.
The Office of the U.S. Trade Representative has, as a result, initiated a review of the eligibility of Uganda, Rwanda and Tanzania to receive benefits under AGOA.
EAC member countries resolved to outlaw the importation of used clothes and shoes across the East African Region by 2019. The resolution is part of the industrialisation policy fostered by the various East African Heads of State to transform the manufacturing sector in member states. It will also restrict importation of used motor vehicles.
To effect the move, the Tanzanian parliament voted in June 2016, to approve a budget that doubled import duties on secondhand clothing, increasing the tariffs from 0.2 to 0.4 US dollars per kilogramme.
During the same month, Kenya and Uganda announced tariff increases on used clothing imports similar to those announced by Tanzania while Rwanda raised import duties on secondhand clothing by from 0.2 to 2.5 US dollars per kilogramme.
The petitioners observe that the tariff increases are so high that they amount to a de facto ban on second-hand clothes and make clear that EAC member states are moving full steam ahead on implementing it.
SMART Executive Director, Jackie King says in the petition that the association seeks the reversal of the ban and the roll back of the recently increased duties in EAC member nations. The Association estimates that the implementation of the interim duty increases by EAC countries led to a loss of 5,000 jobs in the private sector of the U.S. used clothing industry and the loss of another 19,000 in the not-for-profit sector.
Through the review, the U.S. Trade Representative-USTR and trade-related agencies will assess the allegations contained within the petition and review whether Uganda Rwanda and Tanzania, are adhering to AGOA’s eligibility requirements. The countries could be terminated from the list of beneficiaries if the review detects any form of violation.
Signed into law in 2000, the African Growth and Opportunity Act promotes trade and investment in sub-Saharan Africa, including through substantial trade preferences.
It designates sub-Saharan African countries as beneficiaries eligible for duty-free treatment for certain products as well as for the preferential treatment for certain textile and apparel articles.
In order to qualify for AGOA trade benefits, partner countries are required to meet certain statutory eligibility requirements, including making continual progress toward establishing market-based economies, the rule of law, political pluralism, and elimination of barriers to U.S. trade and investment, among others.
The East African Community nations are one of the most important markets for U.S. industry’s used clothing exports, with direct American exports to the EAC member countries totaling approximately $24 million in 2016.
U.S. AGOA imports from Uganda, Rwanda, Tanzania, totaled $43 million dollars in 2016, up from $33 million in 2015 while U.S. exports to Uganda, Rwanda and Tanzania, moved from $257 million in 2015 to $281 million in 2016, according to the statement issued by the Office of the U.S. Trade Representative.
The statement signed by Edward Gresser, the chairperson of the Trade Policy Staff Committee in the Office of the United States Trade Representative, indicates that the agency has determined that there are exceptional circumstances warranting an out-of-cycle review of the AGOA eligibility for the three countries.
He explains that Kenya was excused from the review due to recent actions 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.
It however adds that USTR will continue to monitor Kenya’s actions to follow through on its commitments. Burundi, the other member of the EAC bloc is not a beneficiary of AGOA.
The review process will start with a public hearing in Washington, DC on July 13, 2017. The AGOA sub-committee of the TPSC will consider written comments, written testimony, and oral testimony to develop recommendations for President Donald Trump as to whether Uganda, Rwanda and Tanzania are meeting the AGOA eligibility criteria.
The Act requires the President to terminate the designation of a country as a beneficiary if he determines that the country is not making continual progress in meeting the eligibility requirements.