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Al Jazeera reports that earlier this year Rwanda was partially suspended from the African Growth and Opportunities Act (AGOA). Essentially AGOA allows eligible African nations to export selected goods to the U.S. tax-free. The organization exists as an acknowledgement of the systemic inequalities that contribute to the global wealth disparities. In light of this suspension, Rwanda has decided to join the growing group of nations that face unfavorable trade polices implemented by the Trump Administration. However, unlike other countries that are disputing over trade deals with the U.S., Rwanda is a developing country. As such, its partial suspension from AGOA affects it much more than developed countries.
The contention in trade relations between Rwanda and the U.S. had been brewing since 2016; when Rwanda and several other East African countries began an initiative to phase out the practice of importation of used clothing from developed countries to developing countries. The forces behind the “used clothing industry” are the consumers from wealthy nations, mostly Europe, China, and the U.S., that quickly cycle through their wardrobe and want to get rid of their “used clothing”. Such clothing often ends up in Africa, where markets with seemingly endless piles of hats, shirts, pants, shoes, dresses, skirts and coats are a common sight.
The industry of “donated clothes” involves transporters, buyers, and sellers. Al Jazeera reports that “over $150 million worth of used clothes is estimated to enter Africa each year.” Moreover, USAID says that the “industry employs more than 355,000 people in East Africa, supporting the livelihoods of 1.4 million people.” Despite these figures, many East African governments view the industry responsible for eroding the domestic clothing manufacturing sector. Local producers simply cannot compete with the cheap prices second-hand clothing is sold for.
Several African leaders called for an end to the “used clothing industry” on the grounds of preserving dignity of their own people and the manufacturing industry. Clare Akamanzi, CEO of Rwanda Development Board, says that it is the government’s “belief that our citizens deserve better than becoming the recipients of discarded clothes from the Western world. This is about the dignity of our people.”
To revitalize their domestic industries and to rouse national pride, in 2016 several East African nations made a pact to reduce the importation of used clothing. They began imposing tariffs on imported used clothes. That was done to minimize the amount of clothes they were bombarded with from Western countries. The U.S. said that the newly imposed tariffs violated free trade agreements, and retaliated by threatening to suspend participating African Nations from AGOA. The threat mostly worked. Kenya, Tanzania, and Uganda withdrew from the pact but Rwanda held its ground.
Rwandan leaders are seriously committed to the “Made in Rwanda” campaign. Taxes on imported used clothes are currently at $2.50 a kilo, whereas they used to be a mere $0.20. For the next fiscal year, they are scheduled to be raised to $4.00 a kilo. The long term goal is to completely ban used clothing imports. However, Rwandan traders and sellers of used clothes are unhappy with this development. Their products have been made unaffordable for many clients and they are losing business. Some consumers are also disgruntled as they face higher prices.
This current struggle reflects some of the tensions that arise when a growing nation tries to break free from neocolonialism. While globalization provides opportunities for growth, it can also strengthen the systems of dependencies and exploitation that exist between developing and developed countries.
In the case of Rwanda, it is clear that it is trying to enter into the ranks of “developed” nations by protecting its domestic clothing market. However, critics question if Rwanda has enough supporting infrastructure to meet the needs of its local consumers, while being able to provide a competitive price to imported clothing. Time will tell if Rwanda’s economic route enhances economic growth of the country or if it further burdens Rwandan consumers with expensive prices.
Meanwhile, the appropriateness of the U.S. government’s response to East Africa’s initiative to reduce used clothing imports can be questioned. While it is natural to protect one’s own interest, an ethical reason for AGOA’s existence must also be taken into the account. AGOA was a commitment made to help develop some of the countries which face the most poverty. East Africa’s desire to stop being used as a dumping ground for the West’s discarded clothing is also part of the larger goal of development. The U.S. should acknowledge this and stick to its initial commitment to help these nations develop, rather than respond so aggressively. Moreover, it is odd that the U.S. picks a trade battle with Rwanda, a nation representing a minuscule amount of trade for the U.S. Commenting on the situation Rosa Whitaker, former U.S. trade official said, “The Trump administration is making a symbolic statement rather than a substantive statement.” While symbolic statements are important in the realm of international politics, it seems wrong to use them towards Rwanda, a nation where the average annual income barely reaches $700. The U.S. should get back on track of supporting East Africa’s development rather than trying to receive minor economic benefit from exporting used clothes.